Event strategy

[vetten]

Hello folks,

I dont think I`ve seen something simple on here as an event strategy.

Everybody is really busy with all kind of methods that take years to learn until the eyes get watery and the wife gets mad and are sitting behind their computer all day to watch the lastest losses.

I haven`t tried it out yet, because first I need a broker that`ll cover all the major equity markets.
Anybody know one? Or two?

But: about every day there is something big going on, either very good or very bad with a company somewhere in the world like Enron, Parramat etc.
One thing is for sure here: the price will go down.
So why not follow the business news before the bell, pick out the best one or two for the day
and pile all your money and margin on those stocks.
Cant find any stock.........just wait for next day.
MOO (market on opening) with a tight stop loss (say 2%) and a trailing stop of 2% and take the rest of the day off and go fishing. The market will do the rest.

Generally with shattering news, I dont think that the opening price will be the bottom price for the day and the price most likely will go down for the next two days as well.

I would be surprised if you didn`t get it right in 80% of your trades

Sorry, I should`ve kept it to myself.....nobody really talks about this method, so it must be a good one????????????

 

[Southpaw46]

Hello:
I make a good living trading around events. There are many articles and texts that discuss the subject. Those of us who have any sense at all realize that it is essential to find non-random behavior to trade. Otherwise trading is simply a form of gambling. A good reference text on the subject is written by Ben Warwick. There are others. Some of the best methods of trading events include trading around economic reports, trading earnings reports, and on an intraday basis, trading the daily news including broker recommendations. When I began trading, I had little knowledge of the nuance of event trading and so I opened an account with Man Financial in Chicago. You will need to develop your education as regards the opportunities and then decide how to execute (with shares, or options). You have a bit a project in front of you, but like all things, if you take it a little at a time you will be fine. Good luck., Southpaw

 

[vetten]

Thanks Southpaw........so you reckon I`m on the right track. Well I know what I want, but like you said it takes time to put everything in its place.
The events I want to trade on are in the BIG impact category, where prices might go down 20-40%. Those opportunities might not come around every day, but I want to be patient.
I`m sure you would have traded those events as well and are probably more profitable?

I think you are in options. I dont have a lot of experience with options, because there`s quite a bit involved with things like delta, leverage, probably need software for those things and maybe a lot of shares dont have options. With equities what you see is what you get, although options might be more profitable?

You talked about gambling.......maybe that`s why 9 out of 10 traders lose money????

Thank you so much for your time Southpaw.

 

[Trader333]

vetten,

One thing is for sure here: the price will go down.

This assumption is incorrect. In many cases when bad news is received the price goes up and vice versa. What you can be sure of is that the price will move but second guessing which way is not the best policy in my view.


Paul

 

[vetten]

Sorry Paul, but I dont agree with you. If Spitzer launches an investigation into a company you can be sure that the price will go down. No second guessing there. If a trader scandal comes to light that traders at a bank rake up losses to the tune of $ 400 million, there is one way the price will go: down!
I only want to trade these types of events and I dont want to be arrogant, but I reckon that I will be right most of the times and if not, my stop loss will take care of those times.
I think that technical analysis is more of a gamble, because they will be right 50% of the time on average unless the market as a whole is in a uptrend.

But each to their own strategy and I`m happy Paul that not everybody agrees with me.

Happy trading.

 

[X-Ray Specs]

Trying to get in before the big boys or market makers have pushed the price will be the hardest part.
You could always trade the opposite in that market reaction is almost always overdone.

If really quick, trade both.

 

[vetten]

Hello X-ray,

With BIG impact happenings I thought to put in a market-on-opening order with IB for US orders. It seems that those orders will always be filled at the opening price for NYSE and Amex, because those are native orders. Nasdaq doesn`t accept MOO orders so IB have to put in a market order after opening and then the price would be anybody`s guess.
With these big events, I dont think the market will turn too fast...........it might even take a day or two
Anyway I always put a tight stop loss and trailing stop in with my order in the first place.

Thanks for your contribution X-ray.