Buy on rumors, sell on facts
Results 1 to 8 of 8

Thread: Buy on rumors, sell on facts

  1. #1
    Super Moderator Gulfstream's Avatar
    Join Date
    Jan 2013
    Posts
    1,019
    Thumbs Up
    Received: 245
    Given: 151

    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.
    Attached Images Attached Images

    Not allowed!

  2. #2
    Super Moderator Gulfstream's Avatar
    Join Date
    Jan 2013
    Posts
    1,019
    Thumbs Up
    Received: 245
    Given: 151
    I'm not saying that this kind of information does not leak, but such a rumour is not “massive” and does not refer to our expression “Buy on rumours, sell on facts”. Now everything is much simpler, rumour can be represented by any analytical forecast or fundamental reasoning based on certain statistical data made by a serious company regarding a certain asset. “Great minds” having a lot of information at their disposal and strong tools for its analysis, give out to the masses” the grain itself”, with the rationale why this will be exactly this way. And when, let's call them in one word - analysts, converge in their reasoning, traders and investors who trust their thoughts begin to buy an asset, trying to do it before others, so as not to be left on the sidelines, and the hype, according to all the laws of marketing, pushes the price upwards, thereby creating a directional movement in the market (it is necessary to mention that “buy” does not means entering a long position, we have the opportunity to trade in both directions, therefore, it is considered that this means opening a position in a certain direction, appropriately to previous forecast). So, everyone was bought and waiting for the publication of the “rumor” that everyone was talking about.

    Not allowed!

  3. #3
    Super Moderator Gulfstream's Avatar
    Join Date
    Jan 2013
    Posts
    1,019
    Thumbs Up
    Received: 245
    Given: 151
    We smoothly passed to the second part of our expression. What happens when the data is published? There are three options for the further development of events:

    - the data is issued in accordance with the forecast. If they were expected to be positive for an asset, then logically, it should be more expensive, but the question arises, will it be more expensive, if everyone has been sitting in a position for a long time? We heard the expression “Everything has long been taken into account by the market”, this is exactly the moment. Then a couple of those who are lagging behind or do not trust the forecast are trying to jump into the market, pushing the price up a little more, but the “minds” who conducted the analyzes and did it for a very long time realize that the growth potential has been exhausted and profit is taking opposite place. And when the market begins to roll in the opposite direction, the rest also close their positions, thereby moving the market in the other direction;

    - The data is better than it was expected to be. At this moment, many market participants are connected to the instrument, who do not use “rumours” in their arsenal, thereby moving quotes. But at a certain moment, those who bought “on rumours” likewise begin to take profits, thereby reducing the bullish pressure and at one fine moment the price is balanced at a certain point and starts to stick back or go to the side;

    - the data is worse than it was expected to be. All those who entered earlier understand that the “rumour” turned out to be false and close their positions, besides, those who were waiting for the fact and did not trade on the rumours joined the market. And in this case, the market simply takes in the unknown distance, since absolutely all positions will be sent in one direction.

    It is impossible to know if the rumour is confirmed beforehand, at least for ordinary traders. Therefore, it is more logical that not to close their positions at a loss, transactions are recorded in a moment before publication or in a moment later, and this creates fabulous volatility at the output of important news.

    Not allowed!

  4. #4
    Super Moderator Gulfstream's Avatar
    Join Date
    Jan 2013
    Posts
    1,019
    Thumbs Up
    Received: 245
    Given: 151
    To believe the rumours or not - this is everyone’s choice, but the fact remains that rumours play an important role in trading and can instantly move quotes over very serious distances. There is no 100% chance that the phrase “Buy on rumors, sell on facts” will bring profit, but the fact still remains working, and in order to increase the likelihood of positive development, you shouldn’t trust everything in a row and work with each "romours" and importantly in the case of a hearing to it, do not regret that you were out of the market. As they say, "trust, but verify" as well as " it is not possible to earn all the money in the world."

    Not allowed!

  5. #5
    Trader layigold's Avatar
    Join Date
    Dec 2013
    Posts
    10,145
    Thumbs Up
    Received: 164
    Given: 90
    Of recent , there have been so many erratic move on GBP related pairs and this is not unconnected with the rumors about Brexit . It even got a point I had to distance myself from any GBP related pair . I took so many trades having carefully analyzed the market but shortly after that there would be a rumor being cooked up somewhere and the next thing that follows is to see the market buying into the rumors and this definitely may alter the primary direction of the market

    Not allowed!

  6. #6
    Trader
    Join Date
    Feb 2014
    Posts
    2,483
    Thumbs Up
    Received: 11
    Given: 9
    so good thread which get more focus on the news influence on the making fe eal trading , this at the times of the news markets can move with very different ways , according to the pending orders which can be located on the markets , also there are very big numbers of the traders whole the world to enter the event , this can cause very strong movement even if it fake movement within short seconds the market can change its direction .

    Not allowed!

  7. #7
    Trader
    Join Date
    Aug 2014
    Posts
    1,297
    Thumbs Up
    Received: 0
    Given: 8
    Well I think he has not everything about this market is predictable in fact only about half of the things involved in this market are very predictable and they can be used to make money so what you should do is keep in mind that the market can be unpredictable and therefore you should also be unpredictable and use new methods and no new formulae in order to sustain in the long run and make money in the changing circumstances of the market.

    Not allowed!
    If you Try, You risk Failing: If you don't, You ensure it.

  8. #8
    Trader
    Join Date
    Aug 2018
    Posts
    153
    Thumbs Up
    Received: 2
    Given: 0
    A trader can try to get profit from forex with extreme self-indulgence. What is the supposition of extra self-indulgence? Every forex trader requires good and some definite profit level but when a trader is repeatedly trying to get earning by randomly engaging in trades irrespective of thinking his abilities to bear risks and all then it can make the whole trading voyage a risky one in one basic simple expression.

    Not allowed!

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •