making a mint off news on trading desk

[police]

on Friday 11Apr I was short bonds just before GE announced their much worse than expected earnings. I was on a trading floor and knew this news was due out so I pulled all my orders. As I watched my news screen I saw the results and immediately coverred my position within 3 ticks. Two more ticks later I was long.
The point here is that technically there was nothing wrong with being short as I was on-side and loooking at new lows with possibility of stops sending us lower. The reality was that the NEWS instantaneously changed everything and if I had been at home trading I think I would have lost a mint instead of making it.
I post this so that some of you home traders who baulk at costs of trading fom office and make excuses to skimp, will eventually realise thats a false economy. Because of my trading environment I paid for the equivalent of about 4 years desk fees yesterday because I trade in Professional Environment

 

[TheBramble]

What else other than a Bloomberg feed would you have needed 'at home' to achieve the same result?

(And well done by the way....)

 

[police]

Im, not saying its impossible, but how may people trading from home have bloomberg. Less than 1%.
You may have that and be set up professionally, and thats great, but hardly anyone else does. My point is about being professional if you want to keep up with the market instead of chasing it.

 

[jayjay121]

Im, not saying its impossible, but how may people trading from home have bloomberg. Less than 1%.
You may have that and be set up professionally, and thats great, but hardly anyone else does. My point is about being professional if you want to keep up with the market instead of chasing it.

what about subscribing to a squawk or something similar.................and anyway how does it work exactly?, do you recieve the data faster than say people watching cnbc?, and if so how much faster?, one last question if you wouldn't mind is in reality how easy is it to place a short trade say just after the ge results were out?, you wouldn't get filled would you?

please excuse my ignorance, im learning all the time and would like to know the above, thanks



jason

 

[TheBramble]

Im, not saying its impossible, but how may people trading from home have bloomberg. Less than 1%.
You may have that and be set up professionally, and thats great, but hardly anyone else does. My point is about being professional if you want to keep up with the market instead of chasing it.

Totally agree. But few retail traders get to a stage where they will be able to justify the expense of a professional setup precisely because they don't have a professional setup. It’s not chicken and egg either. Those that start out with a professional intent and spend accordingly tend to do far better than those that don’t.

Part of the blame I believe lies in the mass of books that hit the exploding retail market and on-line trading capability for Joe Public in the late 80s and early 90s that advised starting as cheaply as possible and preserving your cash for trading capital. Looks good on paper, but it doesn’t work that way too often.

 

[gamma]

Yes its great to have a professional setup but if you don't know what the numbers mean its a total waste of money. How many retail investors can analyse the market so quickly to take advantage of it.
The best thing a retail investor can do is stay out of the market when moving news is due this stops you from making a mint off news but it also more importantly stops your account getting blown out.
I do not have a professional set up but do make my fairly decent living from the market.
Technical analysis works fine until news comes out so stay out when news is due and you will do well

 

[arabianights]

Problem with that analysis is you don't know when the really big market news is due. The kobe earthquake wasn't scheduled. 9/11 was but I doubt it appeared on G7TODAY. Neither as far as I can tell is the latest liquidity scheme/Bretton Woods type agreement I am sure is coming and hope happens when I'm at a trading screen although you can make decent guesses. It's those black swans again...

 

[belflan]

I guess my interest in news affecting the markets is more to do with the risk to open positions, rather than profiting from the news moving the market (well not just after it's released anyway)

I often think of 'black swan' events, I'm not sure if anyone has answer to them (know your overall exposure to the long side at any one time? Only go short? (don't think there's a reverse of a black swan? white pigoen maybe?)

I am very interested however in knowing how successful retail traders manager normal news events (earning etc)

Is a bloomberg feed really needed?

thanks
belflan

 

[grantx]

Belflan,

"Is a bloomberg feed really needed?".

I think it's a case of you get what you pay for. The cheaper feeds are OK for the majority of the time but I think Police's point is when the stih hits the fan, you may well pay the price.

Perhaps the question should be: "Can you afford not have Bloomberg/Reuters/CQG, etc".

Grant.

 

[belflan]

Belflan,

"Is a bloomberg feed really needed?".

I think it's a case of you get what you pay for. The cheaper feeds are OK for the majority of the time but I think Police's point is when the stih hits the fan, you may well pay the price.

Perhaps the question should be: "Can you afford not have Bloomberg/Reuters/CQG, etc".

Grant.

Hi Grant,

that's not really what I'm thinking off mate, i'm thinking more inline with what gamma's saying, if you were a retail trader and seen the news comming through on Bloomberg, would you know what to do will it? even if you were the 1st person in the world to get the news release, what would you do? other than wait for the markets re-action?

If I believe there is extra value in having bloomberg i might make plans to get it? not sure yet tho, if as a retail trader there would be an advanage for me over just watching CNBC on normal TV?


thanks for your post btw
cheers
belflan

 

[grantx]

Belflan,

I see your point. Positions prior to news are potentially deadly precisely because of the uncertainty of the figures and the reaction. Better to stay out, I reckon and then go with the reaction for a quick scalp if its particualrly strong, then maybe consider the counter-reaction.

Grant.

 

[timsk]

Problem with that analysis is you don't know when the really big market news is due. The kobe earthquake wasn't scheduled. 9/11 was but I doubt it appeared on G7TODAY. Neither as far as I can tell is the latest liquidity scheme/Bretton Woods type agreement I am sure is coming and hope happens when I'm at a trading screen although you can make decent guesses. It's those black swans again...

While this is true for the events you mention like 9/11, it doesn't apply to the majority of news stories which are known about in advance, such as the GE earnings release that police referred to in his opening post. My belief is that if you want to trade the news itself, then yes, top notch professional kit may be necessary, essential even. I day trade U.S. equities and try to ensure that I'm out of the market when news stories are due which are likely to move it one way or the other - e.g. a Fed announcement. Then there's news which affects a particular sector. I got caught napping a week or two back when adverse oil numbers were released and I was long an oil stock. A silly mistake and one that's easily avoidable. I try to be flat when news is expected so that I can observe how the pro's are trading it. I'm then in a position to trade the reaction to the news, rather than the news itself. One doesn't need fancy kit to do that, IMO. Correct position sizing and trade management will suffice. I accept fully that sooner or later, I will take a hit when the next big disaster happens, but surely that's the risk we all take; regardless of whether we're a tooled up pro' or a mickey mouse home based retail trader.
Tim.

 

[gamma]

We should specify here we are talking expected economic news releases
One of the reasons I do not trade the news is (and I don't know if this is true ) I read somewhere that situations have already been set up by the big boys . e.g if manufacturing output is 48.8 sell but included in this instruction there are other instructions like if it is 48.9 buy as even thought it is below the magic 50 it might be rising from a low ( this is obviously a very simple analogy )but to demonstrate a point
so even if you are quick enough to analyse the news you might get it wrong
There are far more opportunities gained from the build -up to to the news than the actual news event
remember the old adage
Buy on the rumour sell o the news

 

[counter_violent]

I often think of 'black swan' events, I'm not sure if anyone has answer to them

I've heard it on good authority that a rolled up copy of the FT is all that's required, apparently you make a swatting motion with it. Now if a particularly nasty looking black swan is looming, then you opt for a weekend edition, which I believe is a bit thicker.

 

[police]

being on a trading floor, I knew exactly what was happening - YOU CANT MISS IT - let me explain

first your primed ready for the figure because your analyst had been over it on the loud speaker.

you have bloomberg and reuters to watch the numbers come out.

GE results come out and in the next 1 , 2 , 3 or 4 seconds you see whats happening

equity indices dumping,
immediate buying of bonds,
traders making their war cries,

You know immediatlely you have to be Long Bonds / ShortsStocks

You trade it that way round or more fool you.

You know all those retails/client orders that have been left in the market are hoovered up by the traders - its all advantage to the trading floors.

Something like this happens every now again, over the course of a year there a dozens of occasions, some to be fair more obvious than others. However, if I was to total the difference it makes financially of being on a floor, the numbers would be staggering!

 

[belflan]

You know all those retails/client orders that have been left in the market are hoovered up by the traders - its all advantage to the trading floors.

Newbie's beware! you don't want to be on the other end of that hoover

 

[jayjay121]

Newbie's beware! you don't want to be on the other end of that hoover

belflan are you still following greys methods?, how are you getting on?..................ive been shorting the ym mini dow recently with great effect.............to be honest all ive done is wait for market to rally up then short using atr14 x 1.5 as a stop on a hourly chart, as grey says we are in a bear market at the mo, so i only been shorting, i made $2200 this week and i missed the move on friday otherwise would have been more, wonder if i can repeat it next week as this is my goal.

police, a question please if i may............see this link Week Ahead: Challenging -- At The Least - Market Insider with Patti Domm - MSNBC.com , as you can see there is alot of news out next week, will all this news immediately have an affect on the markets once out?, and can we trade it soon as the market moves in any direction or will it be too fast and me too late?, and unable to profit from it? I realise the financials earnings will be more sufficient.


thanks

jason

 

[police]

police, a question please if i may............see this link Week Ahead: Challenging -- At The Least - Market Insider with Patti Domm - MSNBC.com , as you can see there is alot of news out next week, will all this news immediately have an affect on the markets once out?, and can we trade it soon as the market moves in any direction or will it be too fast and me too late?, and unable to profit from it? I realise the financials earnings will be more sufficient.


thanks

jason

1. Not all news will have an effect on all markets.

2. You do not have to be flat before ALL news / releases - But , You do need to be ready to REACT to the news - especially if its OUTSIDE THE MARKET EXPECTATION

3. Its extremely difficult to get the first two or three ticks of a significant news event, but you can get on a move (BEWARE chasing the market too far, as you may end up getting in as the move expires - this is where experience counts).

I hope this helps a little

 

[grantx]

Jason,

The main market movers next week are JP Morgan, Merril Lynch, Citigroup, Intel, IBM and Google. Unfortunately, I know neither the days nor times of the releases. Perhaps someone does.

Grant.

 

[jayjay121]

1. Not all news will have an effect on all markets.

2. You do not have to be flat before ALL news / releases - But , You do need to be ready to REACT to the news - especially if its OUTSIDE THE MARKET EXPECTATION

3. Its extremely difficult to get the first two or three ticks of a significant news event, but you can get on a move (BEWARE chasing the market too far, as you may end up getting in as the move expires - this is where experience counts).

I hope this helps a little

yes it does help, thanks.................i once traded a fed announcement, the news was out, the market moved down violently, i placed a market order, but the market order was like 10 ticks away from the price, then the market reversed, i lost alot of money but learnt from it. So what your saying about chasing the market, this is exactly what i did so you are right. I would like to stay away completely from news and earnings as im not expereinced enough but with all the news everyday is this possible?, as any surprises could really mess up my positions if you know what i mean.

Also i guess if it was as easy as following the crowd which is what i tried to do, then everyone would be doing it, they tried to teach me this fundamental stuff at the arcade but i never paid attention to it, regret it now.


cheers

jason