News vs. Noise.
As a day trader you only need to worry about news if it is going to be directly affecting the particular stock(s) you plan on intra-day trading. Most amateur day traders can’t resist allowing media babble to influence their stock picking and trading activity.
My #1 rule on news is very simple:
If your stock is trading abnormally due to recent news releases, THEN STOP TRADING IT ON THAT DAY.
Once your stock begins to experience abnormal activity due to the response of recent press releases, then you need to sit on the sidelines and wait till the craziness settles. For the most part, news and economic reports will immediately affect trading activity on Wall Street. Your job as an independent day trader is to not be in a trade when it’s going nuts do to news that just hit the wire.
Thus, your job is to be fully aware of when the news hits the wire.
Tips on monitoring news and economic reports.
- The most important press release on all stocks is the economic reports, particularly quarterly earnings. It is paramount that you have these dates on a calendar. You DO NOT want to be trading on the day of an earnings release. Your stock will most certainly be experiencing abnormal volatility. Simply trade your other stocks and wait till the next day to begin trading your stock after the market has responded to the earnings report. Don’t try to predict how Wall Street will respond to the numbers.
- How to find this data is really simple and free. Simply go to Yahoo Finance. Click “News,” then click the “U.S Earnings” tab, and type in your stock symbols. This will give you the next date your stock will be releasing its quarterly earnings statements. Mark your calendar, and plan around that date.
- There are several other news releases that can affect your stock during intra-day trading. Including:
- Fed interest rate cuts/hikes
- Core product issues
- Merger talks
- Class action lawsuits
- Bankruptcy announcements
- Employee strike threats
- CEO resignations
- Governmental interventions
- Chief competitor advancements
- The news examples above can be found by simply keeping the CNBC Business News Channel on all day while trading.
- You should always run a quick news search on each of your stocks every morning before trading. I usually run a quick search every hour throughout the trading session. There are news filtering providers that you can purchase (monthly access fees), and these systems will alert you when ever your stock has hit the wire, such as: Sign-up with MARKETWIRE.com
