If you’re interested in day trading, then you’ll probably want to get familiar with the influence the news has on day trading. Here’s everything you need to know about the role news plays in trading and how to take advantage of it.
Why Day Trade Breaking News
The first thing that you should know about the stock and securities markets is that they are very closely connected to the news. Anytime a company is trending in the news, there’s sure to be some fluctuation in their position on the market. Even if it’s just a small piece of news, it’s bound to have an impact.
As a trader, it’s your responsibility to decide how to react to any new pieces of information that get released. Your reaction will likely be different depending on whether you’re a day trader or a more long-term investor. As a day trader, it’s important to be quick to respond to breaking news. If you’re the type of person that is familiar with certain industries and you’re confident in your ability to predict how the markets will react, day trading breaking news can be a fun and lucrative opportunity.
It’s also important to note that there are some reasons that you may not want to day trade breaking news. This type of trading requires much more hands-on focus in the moment, as opposed to having a strategy that you can automate. Relying on breaking news to come out can also mean that you’re waiting for long stretches without any good opportunities for movement.
Tips for Breaking News Trading
To day trade breaking news, you’re going to need a good news source. While watching news channels and monitoring breaking stories can be useful, the best thing you can do is follow a stock market news feed like Benzinga Pro. This tool can give you real-time notifications so you can go about your day normally instead of worrying about missing something major.
No matter which news feed you follow, there are a few features that can be useful in trading plan. Since you’re using the tool to make monitoring the news easier, you’ll want to be able to set up filters for the news and topics that you’re most interested in. Another tool that can be helpful is one that can give you a quick snapshot of why the stock is moving so you know immediately whether you should move on it or not.
One of the biggest decisions that you’ll need to make is deciding which industries to invest in. First off, it’s always important to do some research on the industries that you’re considering. If you’re planning to day trade breaking news, you’ll want to have some familiarity with the industry and how it works. When a piece of news breaks, you’ll need to be able to decide how to respond to the information and it’s much easier to do that if you have an idea of how the news will affect the industry overall.
To pick your industries, you may want to use the trade volume index to review the amount of money that is flowing in and out of an asset to help you determine whether or not to buy into a stock. If a company or industry’s trade volume is high, it’s oftentimes a good candidate for day trading. You can also consider which industries are experiencing growth. If an industry is seeing somewhat of a boom — meaning that there are new companies in the industry popping up rapidly — there will likely be a high trading volume for stocks in that industry.
Types of Breaking News
There are many different types of breaking news to be on the lookout for. Some you can expect to come out, whereas others are unexpected pieces of news that can be good or bad.
The expected news that you’ll want to keep an eye on include things like earnings reports and interest rate forecasts. Companies typically release earnings reports each quarter, so you can usually expect to see them sometime within the first two weeks of January, April, July and October. As far as interest rates go, you’ll typically also be able to find reports showing the past trends with a prediction for the next 90 days.
Then, of course, there’s the unexpected news. This is probably what comes to mind when you think of “breaking news” and it’s just as important as the quarterly earnings reports. Unexpected news is basically any piece of news that couldn’t be anticipated. It could be something as simple as a company launching a new and exciting product, or as scandalous as the CEO of a major corporation getting arrested. Unexpected news can also include major weather events such as devastating earthquakes and tornadoes.
Factors to Consider Before Trading Breaking News
There are numerous factors to consider before you enter into any type of trading, including day trading breaking news.
You can use the fundamental analysis approach to help predict the future value of the stock. This can also help you determine if the stock is currently overvalued or undervalued. By doing this, you may be able to get ahead of the market when it comes to a potential investment opportunity.
In combination with fundamental analysis, you may also want to use technical analysis. This is another tool that can help you predict future market behaviors by studying past market performance.
When choosing any day trading approach, you should figure out which technical indicators to use. To do this, you’ll want to test out a variety of indicators individually, and then test them in combination with one another. Using indicators can help you identify when is best for you to initiate your trades.
Finally, you should consider the trading volume. When trading volume is higher, the number of other traders in the market makes it easier to buy or sell your stock.
How the News Affects Stock Price
The news can affect stock prices in several different ways. Understanding how the news can change prices will allow you to move quickly as soon as you see breaking news pop up.
If a negative piece of news comes out about a specific company, it will most likely lead to people selling stocks in that company. A poor earnings report can also lead to people selling stocks in the company. A negative economy or poor political landscape can affect not only specific companies but the market as a whole.
On the other hand, a positive piece of news about a company can encourage traders to buy stock in that company. Pieces of positive news can include a new product announcement, major developments or an expansion of the company. If the economy is doing well overall and there is a positive outlook moving forward, this can cause the entire market to see an increase in stock prices.
As a trader, the best thing you can do is focus on anticipating news cycles. There are a few different tools that you can use to help you do this. First, you can keep an eye out for government economic reports, such as the Bureau of Labor Statistics’ employment report. When reviewing reports such as this, you’ll want to consider what it says about the current strength of the economy overall. Since a strong economy typically equals higher stock prices, you may be able to get ahead of the curve by predicting changes in certain industries.
Using Benzinga Pro for Breaking News Trading
Benzinga Pro is a streaming platform that can keep you in the know by providing all of the information you need for breaking news trading. It gives you access to the Benzinga Pro news desk, which can provide you with actionable information so you can take action before the market moves. You can also use the live audio squawk to listen to live streams filled with key headlines and real-time market updates daily. Finally, you can set up real-time news alerts based on your portfolio to make sure you don’t miss any headline that can make a difference in your portfolio.
Ready to see what it’s all about? You can sign up for a free two-week trial of Benzinga Pro today.
Day trading breaking news can be a great opportunity, but it’s not something that you should enter into blindly or on a whim. To be a successful day trader, you must be familiar with the market and understand the risks that come with it. You also need to be prepared to make quick moves and it’s helpful if you have the ability to predict and anticipate changes in the market. No matter what you do, you’ll need to have the right approach.
Fortunately, there’s a way to make day trading breaking news easier on you. By signing up for a news feed such as Benzinga Pro, you’ll have all of the tools you need to monitor the market and make your moves at just the right time.
Disclaimer: Benzinga is a news organization and does not provide financial advice and does not issue stock recommendations or offers to buy stock or sell any security. Benzinga Pro is for informational purposes and should not be viewed as recommendations. Benzinga Pro will never tell you whether to buy or sell a stock. It will only inform your trading decisions. You can find our full disclaimer located here.