{"id":40049,"date":"2015-03-02T13:00:35","date_gmt":"2015-03-02T18:00:35","guid":{"rendered":"http:\/\/www.smbtraining.com\/blog\/?p=40049"},"modified":"2021-05-06T16:46:59","modified_gmt":"2021-05-06T20:46:59","slug":"enhancing-trader-performance-does-headline-news-matter","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/enhancing-trader-performance-does-headline-news-matter","title":{"rendered":"Enhancing Trader Performance: Does Headline News Matter?"},"content":{"rendered":"

Every day we see the financial media outlets attempt to explain\u00a0the day\u2019s market action,\u00a0usually with a headline pointing to a particular event or supposed market moving event that\u00a0details\u00a0THE reason\u00a0the market moved in one direction or the other. The headlines often change from open to close depending upon the day\u2019s action, as the market can be up for one reason in the morning and down for another by the afternoon.\u00a0 Traders, in their quest to find an edge, will often attempt to trade the news, believing that bullish news one day should lead the market higher the next. However, our logical beliefs about how the market should or should not react to news is often incorrect.\u00a0 Even individual stock news can be frustratingly difficult to interpret.\u00a0 For example, one company may \u201cblow out\u201d earnings numbers and see it\u2019s stock tank, while another may report horrific numbers and guide lower, only to have its stock gap higher.\u00a0 Of course, there is usually a headline to explain this action also\u2026after the fact.\u00a0 Seasoned traders know that common logic is neither common or logical in the markets; therefore, an awareness of such must be part of any trader\u2019s process. The following articles discuss how news affects stock prices and how we may attempt to manage our reaction to the news. <\/span><\/p>\n

\u201cIn general, it’s been found that while news releases<\/a> result in a rapid increase in volatility, the majority of the effect is relatively short-lived and subsides within the first minute.\u201d<\/span><\/p>\n

\u201cThis paper estimates the fraction of the variance in aggregate stock returns that can be attributed to various kinds of news<\/a>.\u201d <\/span><\/p>\n

\u201cIs there a predictable difference between stock returns<\/a> after public news announcements and returns after large price movements, but no public news?\u201d <\/span><\/p>\n

\u201cMore often than not, stock prices are affected by a number of factors and events<\/a>, some of which influence stock prices directly and others that do so indirectly.\u201d<\/span><\/p>\n

\u201cWith the large increase in the amount of daily news content on companies over the past decade, it should be no surprise that the finance literature has turned to textual analysis<\/a> as one way to understand how information both arrives to the marketplace and relates to stock prices of the relevant companies.\u201d <\/span><\/p>\n

\u201cA large body of evidence<\/a> suggests that at certain times investors under-react to information contained in stock returns and at other times overreact.\u201d <\/span><\/p>\n

\u201cAs news events affect human decisions and the volatility of stock prices is influenced by human trading, it is reasonable to say that events can influence the stock market<\/a>.\u201d <\/span><\/p>\n

\u00a0I am looking forward to tomorrow\u2019s<\/span><\/span> headlines.\u00a0<\/span><\/p>\n

David Blair<\/p>\n

THE CROSSHAIRS TRADER
\nwww.thecrosshairstrader.com<\/a><\/p>\n

*no relevant positions<\/p>\n","protected":false},"excerpt":{"rendered":"

Every day we see the financial media outlets attempt to explain\u00a0the day\u2019s market action,\u00a0usually with a headline pointing to a particular event or supposed market moving event that\u00a0details\u00a0THE reason\u00a0the market moved in one direction or the other. The headlines often change from open to close depending upon the day\u2019s action, as the market can be up for one reason in … Read More<\/a><\/p>\n","protected":false},"author":144,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[3441,627,4322,835,1420,144],"class_list":["post-40049","post","type-post","status-publish","format-standard","hentry","category-general-comments-2","tag-enhancing","tag-headline","tag-matter","tag-news","tag-performance","tag-trader","no-post-thumbnail"],"yoast_head":"\nEnhancing Trader Performance: Does Headline News Matter? | SMB Training<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.smbtraining.com\/blog\/enhancing-trader-performance-does-headline-news-matter\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Enhancing Trader Performance: Does Headline News Matter? | SMB Training\" \/>\n<meta property=\"og:description\" content=\"Every day we see the financial media outlets attempt to explain\u00a0the day\u2019s market action,\u00a0usually with a headline pointing to a particular event or supposed market moving event that\u00a0details\u00a0THE reason\u00a0the market moved in one direction or the other. 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