Does anybody trade rumors successfully?

J

jr07

Hi,

Since January I have been using a great service that gives me real time info on the markets. One of the features of the services is a "rumors" category and there are often 2-3 of these on any given day. They are usually related to either unconfirmed takeover talks, deal speculation, merger talks or LBO speculation (don't know what this is).

I have been burned (on paper) trying to trade these moves and promised never to look at them again or even put real money into them. But the moves are so juicy! I have to ask whether anyone out there has gotten a handle on these wild horses and can shed some light.

I use 5 minute charts... and usually the drill is as follows:

- I receive the newsbite on the rumor and open the chart for the ticker in question
- Usually by then, the upward strong move in price is on it's second bar, pressuring upward with strong volume.
- Hesitant to get in at these already high prices, I wait for a pullback

And here is where the problem is. Sometimes price begins to move upward again after a pullback, point at which I enter, only to reverse immediately and never go up again. Having experienced this more than once, I then thought hmmm, maybe these are traps and excellent for shorting. Well, the few times I have gone short after those 2 higher bars, price has continued its upward trajectory!

So I've been burned either way, but can't help feel curiosity to master these moves.

Today's rumors were in NOEC, ENER, TTWO, LEN, RMBS and BKS

Thanks

J
 
Quote from jr07:

- I receive the newsbite on the rumor and open the chart for the ticker in question
- Usually by then, the upward strong move in price is on it's second bar, pressuring upward with strong volume.
More...

FYI, there are subscription services that charge $1500/mo or more to get you breaking news. Traders using these services get in on the move very early, long before the first 5-min bar is 1/5 through. Unless you can get in very early, you are playing with fire, because when it's rumors (not actual confirmed news), I've seen price reverse violently, sometimes making a full retracement of the move as fast as, or faster than, the initial move.
 
I buy the rumor, sell the news..... :) honest.....
Quote from jr07:

Hi,

Since January I have been using a great service that gives me real time info on the markets. One of the features of the services is a "rumors" category and there are often 2-3 of these on any given day. They are usually related to either unconfirmed takeover talks, deal speculation, merger talks or LBO speculation (don't know what this is).

I have been burned (on paper) trying to trade these moves and promised never to look at them again or even put real money into them. But the moves are so juicy! I have to ask whether anyone out there has gotten a handle on these wild horses and can shed some light.

I use 5 minute charts... and usually the drill is as follows:

- I receive the newsbite on the rumor and open the chart for the ticker in question
- Usually by then, the upward strong move in price is on it's second bar, pressuring upward with strong volume.
- Hesitant to get in at these already high prices, I wait for a pullback

And here is where the problem is. Sometimes price begins to move upward again after a pullback, point at which I enter, only to reverse immediately and never go up again. Having experienced this more than once, I then thought hmmm, maybe these are traps and excellent for shorting. Well, the few times I have gone short after those 2 higher bars, price has continued its upward trajectory!

So I've been burned either way, but can't help feel curiosity to master these moves.

Today's rumors were in NOEC, ENER, TTWO, LEN, RMBS and BKS

Thanks

J
More...
 
As a rule I have found that when selective (like dont go against the WSJ) fading rumors works usually.

I made two news trades today and one was PALM. I did go long which is the exception for me but I kept the stop loss VERY tight as your paper burns have been real burns for me often in the past.

knowing how fast they turn around if your going to trade a rumor you better have a VERY tight stop or fade it. Usually I fade especially if they get "beyond" in my opinion.

regardless if you fade it or try to ride it you better have an edge. If you hear the news and pull it up on your chart and its already moved like the news is out then you know your in second place and that often ends up in stocks like it does in a hand of poker
 
Quote from pavlov0032:

Did you read reminiscence of stock operator?

The rumor service is front running your orders
More...

What does this mean?
 
Quote from NoDoji:

FYI, there are subscription services that charge $1500/mo or more to get you breaking news. Traders using these services get in on the move very early, long before the first 5-min bar is 1/5 through. Unless you can get in very early, you are playing with fire, because when it's rumors (not actual confirmed news), I've seen price reverse violently, sometimes making a full retracement of the move as fast as, or faster than, the initial move.
More...

I know! And this is precisely what I want to get a handle on... how to tell when the retracement will indeed take place and short it, or if the rumor will lead to more buying.
None of these are news by the way, only rumors (no solid source like WSJ, etc)
J
 
Quote from loza:

I buy the rumor, sell the news..... :) honest.....
More...

Do you?

Sometimes the price increase from rumors retraces completely giving it all away... what Im trying to find out is when or when not. So far it seems very random
J
 
Quote from jr07:

I know! And this is precisely what I want to get a handle on... how to tell when the retracement will indeed take place and short it, or if the rumor will lead to more buying.
None of these are news by the way, only rumors (no solid source like WSJ, etc)
J
More...

Clearly, you seek adventure in trading. I suggest checking out CL (crude oil futures). You get fantastic moves, you only have to pay attention to one thing, and the time to avoid being in a position is the same time and day every single week :cool:
 
Can you tell us what the rumor source is?

as for buy the rumor, sell the news, this is a common adage/philosophy known by most traders, and it's usually good advice, although this week it seems buy the rumour, buy the news is the correct interpretation.
 
You must log in or register to reply here.
Back
Top