Real-Time Updates Can Be An Investment Game Changer: How To Use News To Trade Better

If you want to make an ingenious portfolio, trading on the news is crucial for sustained returns, whatever be your strategy.

The share markets have popularly been showcasing an unrelenting growth over a long period. Seldom a drastic fall takes place like the 2008 global crisis, where the markets plunged beyond imagination. However, small-time investors can make money come what may. This can be true if you make trading on the news and market insights usage vital to your investment strategy. If you are an intraday trader, you may make use of the news on multiple occasions. A long-term user intermittently makes use of such information. If you want to make an ingenious portfolio, trading on the news is crucial for sustained returns, whatever be your strategy.

The Classification

Shortlisting and identifying the right source of information is very important. Verifying the credibility of news before indulging in its optics is very critical. It is essential to keep track of the market news and opinions. You should avoid having a herd mentality and not ride on news of someone else’s investment. The trick is to identify the breaking investment news and invest accordingly. The change in policy stance for a particular industry by the authorities or alteration of lending or borrowing rates may act as such facilitators.

The key to not get misled by a piece of wrong information is to read the financial news from a reputable source. Thereby, not making a wrong stock choice, which will ultimately impact your portfolio. For example, you can use tricks to ride on the regulator news. If the news and the market conditions forecast regulatory cuts and curbs in the economy, you may short on the counters that will get affected most by the decision. It will give you a chance to earn even when the market is going down.

Subscribing to authentic and reputable news agencies can be a great help. It can help you as an investor to have credible news and better market insights. Trading platforms help investors with expert opinions, actionable tips based on breaking news, and thorough analysis. Investors can use the information to execute better trades and earn higher returns on their stock investments.

However, the fundamental logic of a common-sense observation helping to infer better will always remain the crux of the story. Deducing a product demand change due to change of any market variables may help spot the future scope. Any assumptions that you make should have substantiating data from credible sources. The market news can come under two buckets to make better sense of all the information:

  • Recurring News – It refers to the scheduled news releases that impact the market. Information like the Bank of England’s announcement on the monetary policy or interest rates. And also the earning disclosures by the companies.
  • Unexpected News – It refers to the sudden developments like the onset of a pandemic, a terrorist attack, or a natural calamity occurrence, .etc.

The impact of the news can be on a single stock, the industry, or the market as a whole.

The Trading

Let us dive into the news events, which the investors can keep track of and employ tactics to ride on the sentiment and make a buck for themselves.

Policy-Maker Announcements

The Bank of England’s policy change decision announcements are the biggest factors that affect the market movements. Investors have to be wary of such information and trade carefully.

The ongoing pandemic has seen many alterations in the policy as well as the interest rates. An investor who keeps a tab of such news may hedge a potential downside risk or increase the position to ride on the momentum.  Reactive moves after the announcement of the policy changes often do not benefit like proactive actions. For both the approaches, be it proactive or reactive, your action on the piece of news depends on several variables. It may include, though not is limited to:

  • Conviction of the investor about the market’s direction
  • Risk appetite
  • Trading approach (whether passive or active)

Employment Ratios

The employment ratio is a crucial economic variable that you should take into consideration. Employment levels determine the demand in the economy. You may keep a close watch on these numbers. The employment level has a significant impact on consumer spending. It in turn determines consumer confidence and thereby the trade movements across the various domains.

You may also take note of the fact that when the job numbers are below economist’s forecasts the economy shows signs of weakness. While a higher number than predicted means a stronger economy.

Company Disclosures

When you invest in a particular stock, being aware of the earning disclosure, annual meetings, or launch dates is crucial. Information without action is of no value. Hence, you may have an action plan concerning your trading strategy in the post and pre-disclosure period. Various factors may contribute to your decision to buy, sell, or hold the stocks during these periods:

  • Earning expectations
  • Current Market Sentiment (bull or bear)
  • Stock valuation
  • Investor sentiment (on the particular stock)
  • Price-performance (short and medium-term) 
  • Competition earnings and outlook
  • Current putt levels for the stock

So do not get carried by any information about the stocks, any company, or the market. Have a better understanding of the news from reputable sources. You may go through the financial advisory web portal that is credible and help with the market insights. Working solely on a hunch is not advisable.

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