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Thread: Buy on rumors, sell on facts

  1. #1
    Super Moderator Gulfstream's Avatar
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    Buy on rumors, sell on facts

    I think we all faced such a situation, is it the currency or stock market, that after the release of some important news, an asset, after a slight movement in the “right” direction, sharply goes to the opposite. This is a visualization of the expression “Buy on rumours, sell on facts”. Let's see why everything happens that way. First, our expression is divided into two parts and disassembled each separately.
    Buy on the rumours. In the 21st century, rumours have a slightly different shape than it had before. A couple of decades ago rumours about the stock market can be represented by insider information from a certain source, for example, I went to work in the morning, and grandmas on the bench discussed how yesterday a neighbor from the entrance has shouted into his phone that it was necessary to drop certain stock urgently.

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  2. #11
    Trader J_C_Anderson's Avatar
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    Actually, it is quite difficult to make predictions that would be accurate enough to make trades based on such predictions. That is why sometimes it is better to focus on watching the market and analysing the current situation to find the opportunities that are already exist. In other words, when the news are released, it is better to wait for the trend to appear instead of making assumptions and entering the position during the first minutes since in such case you could be stopped out quickly due to the huge volatility. In the most of the cases, it takes from several hours to several days for market participants to analyse the situation after the news and create new trading plan to act respectively. Thus, you can se conservative approach and join the movement after it would be formed by other traders that already made their decisions and, what is much more important, by institutional players that quite often create trend movements just executing their huge orders. Anyway, the best way to benefit from the news is to wait for the trend and then get into the position during the pullback to get the best risk-reward ratio possible.

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  3. #12
    Trader
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    Buying before the news are released sometimes called "Smart money" meaning that someone could find this trading opportunitiy in advance to be able to benefit from the information that hasn`t been already published. So, if there was no official press release, you can combine information collected from various sources to form your own understanding of the situation and act accordingly. Sure, it sounds like betting, but yeah in fact all trading is betting.

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