Trading on news, why this...

Hi guys and gals,

Can any of you explain to me why prior to news announcement the price moves other way, in some cases this move is quite significant, and once news is out it moves in the direction it supposed to? Take 4th april, unemployment report came out (i think it was 4th of april, seems like ages ago now!)... Just prior to the announcement, ftse went up by quite a bit in one go, and after plummeted down taking all the gains plus more...

I wonder what happens in the market? Why such buying pressure? Is it because traders wrongly "predict" the news, or act on the first sentence of the report or is it doing of market-makers or...???.. Kinda puzzles me. I tend not to trade around the news anyway, unless I am certain what the reaction would be, but still am interested to find out why!

Thanks!
Aqua

Usually it's people wanting to get of their positions before the news comes... so it will move in the direction that it would move if the news feared the most is coming.

In the example you give (I'm saying this without being a ftse trader) presumably traders feared it would be a good number (I know I did), so those who were short and had a fairy like disposition got out before the news having to take whatever the market prices they could get were.

Although that was a weird reaction all day...

leaving it late to get out of a positions and because it is a thing market you have to pay/sell whatever is in the book....

Mp --- Only One Reason, And Its Worth Tons To Ya !

aquamarina said:

Hi guys and gals,

Can any of you explain to me why prior to news announcement the price moves other way, in some cases this move is quite significant, and once news is out it moves in the direction it supposed to? Take 4th april, unemployment report came out (i think it was 4th of april, seems like ages ago now!)... Just prior to the announcement, ftse went up by quite a bit in one go, and after plummeted down taking all the gains plus more...
Aqua

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if you pay attention to the previous days movements aqua, youll receive some interesting information about this.

But the simplest explanation is that the banks, brokers and mms are MOVING THE PRICE DOWN, to get as low as they can in an effort to make the rally LONGER !

invariably, if you see the price moving down just prior to release, you could pretty much just stab your BUY button and sit back till the price reaches the 240 minute resistance point.

In the case you quote, the price had not yet reached resistance so it was run up in one quick move to reach that resistance point, then providing a point where everyone shorted from, it began its downside move !

you made an excellent observation, unless you were just happening to read my posts on this subject, and i have arguments galore with so called "experts", but as you say --- there it is, and now you know why !

PS --- works the other way also !

mp

Call me cynical, but depending on which price data you look at (and I'm really alluding to SBing data here) but I've had straddles on in the past and I swear I was hunted down once or twice before the actual news release (whether this is due to the reasons people have suggested could well be legitimate but you just never know!)

Mikey.

mikeeg said:

Call me cynical, but depending on which price data you look at (and I'm really alluding to SBing data here) but I've had straddles on in the past and I swear I was hunted down once or twice before the actual news release (whether this is due to the reasons people have suggested could well be legitimate but you just never know!)

Mikey.

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well, if "hunted down" means they activated your straddles, it could mean one of two things --- either you won, or they made your stops go nutzoid and you lost.

not sure what happened though -- not clear !

sit back, smile and understand, "just cause youre paranoid, doesnt mean theyre not out to get you !"

mp