Trading on news has been, and always will be, one of the essential strategies for speculators. In the age of the stockbroker, the execution of news trading was probably much simpler, a broker with a stock tip—if it was a rumor or news—made a phone call to his client and made the sale of securities to tip off profitable gains before it was public knowledge.
Now, trading on news can be much more sophisticated. With high-frequency traders and a race for ever faster price and news dissemination, news trading is more a technological endeavor than ever before. Professional traders operate on very expensive trading platforms that work incessantly just to disseminate quotes and news a split-second faster than the competition. For instance, Bloomberg terminals have had a clear and present advantage to any practitioner, making it a leading technology and a must-have for a long time. However, with the advent of social media, where news stories don’t wait a day to go to print, a new avenue for news trading has opened up.
The speed and transparency of which we can receive news is like lightning compared to the old news trading model. What this means, in essence, is that certain news aggregate…
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