c07 JWBT016-Busby October 1, 2008 21:9 Printer: TBD
98 STRATEGIES TO WIN
Review
Each month, an array of research and resulting economic reports are re-
leased by various institutions and governmental entities. Most of this in-
formation is publicized at either 7:30 or 9:00AMcentral time. Traders who
follow both the news and the markets can use this information to make
money. The first step to trading news is scheduling; know when important
news will be released and be prepared. When each month begins, check an
economic calendar and plan accordingly.
If you wish to trade a news event, get ready in advance. Study prices
and indicators before the news breaks. Identify the price points that will
signal a buy or a sell and be prepared to act quickly. When it comes to
news, the early bird gets the worm.
In addition to news reports like the CPI or existing home sales, corpo-
rations regularly release information. Earnings season also brings opportu-
nities. Do your research and identify some stocks to trade. Then watch the
numbers and make your play.
Only experienced traders should trade news, as prices can move
quickly and those on the wrong side of a news play can lose a great deal
of money in the blink of an eye. Unseasoned traders should sit on the side-
lines and wait for the initial excitement of news to pass. Once the mania is
over, it is easier to see the true direction of the market and trade it.
Finally, breaking news is also important to the markets. However,
there is no way to anticipate it or prepare for it. Therefore, it is very im-
portant to always use a stop/loss order to get you out of a market that is
strongly going against your position.