Choices on your poll should have included all the above possibilities .
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How long before news is fully priced in?
- Thread starter kmiklas
- Start date
Anything that moves price. Perhaps "public information" or an "Event" is a better term.
Do you mean how long before the market interprets the news the way you do?
Galbraith said "the market can remain irrational longer than I can stay solvent." or something along that line.
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I usually dont vote in polls KM ;
but did vote =longer than a week. Many voted 1 second, with the exception of earnings; that seems waaaaaaaay too soon. Even DAL\ Enron took much longer\\ months.......................................
Some may NEVER really get it. I have a 2008NYT[new york times]Almanac. They have top 50 newspapers + most likely will never admit IBD was # 75/LOL
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IF IBD move$ up to top #50 , expect NYT to change it to top 40/LOL
The last price print is the distillation of everything known - publicly and privately, about the instrument in question.
Time frame is meaningless in this respect. Very big traders (especially Commercials) will frequently use a number or data release and contrary spec order flows to get into and out of monster positions. So even if a number or data is, for example, thought to be "bearish" - big swinging dicks might use the opportunity to their own advantage to buy at a price they favor. One or two big Commercials can soak up order flows from hundreds or maybe thousands of specs.
Just my own 2 cents, and I wish everyone good fortune !
As a side note, I knew a trader at a very high end proprietary firm who ran a very sophisticated AI driven automated trading program that accumulated news and facts and data from hundreds of thousands of sources and fed them into an AI based logic tree. The firm he was at is a well respected Algo/automation firm so execution for him was not an issue. And I'm not sure he could even cover his considerable expenses in the endeavor.
Time frame is meaningless in this respect. Very big traders (especially Commercials) will frequently use a number or data release and contrary spec order flows to get into and out of monster positions. So even if a number or data is, for example, thought to be "bearish" - big swinging dicks might use the opportunity to their own advantage to buy at a price they favor. One or two big Commercials can soak up order flows from hundreds or maybe thousands of specs.
Just my own 2 cents, and I wish everyone good fortune !
As a side note, I knew a trader at a very high end proprietary firm who ran a very sophisticated AI driven automated trading program that accumulated news and facts and data from hundreds of thousands of sources and fed them into an AI based logic tree. The firm he was at is a well respected Algo/automation firm so execution for him was not an issue. And I'm not sure he could even cover his considerable expenses in the endeavor.
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I think the initial reaction to news is instant, few seconds at most. Then there is price movement for the next couple of hours based on if the initial reaction overshot or undershot. Then finally there are funds that may increase their positions or build new positions for long term holds that happens days after.
So I'd say "fully priced in" is more than a week, but by that time there might be other news that already came out and the cycle repeats.
Depends on the impact of the news and time that needs to digest information. For example NFP, CPI, earnings beat/miss are processed quite quickly since implications are clear (chances are higher/lower that fed will hike/cut rates, company earnings will increase/decrease), other news have long-lasting implications like law in congress which impacts long-term fiscal stance
Your assumption that news and information releases are bilateral and "fair" is quite flawed.
You really need to consider that quite a bit (but not all) of news and data is not new 'news' for big players like Commercials. Hedge Funds spend hundreds of millions every year for private industry insider data services. Steve Cohen made billions and billions buying inside information in the form of consulting fees to all sorts of industry insiders. Commercial Institutions (as industrial users and producers) will certainly know most all information well before the public and the government does. And even government information is frequently leaked to the big corporate players - even intentionally. A great example of this is the German Zew Index - which is intentionally leaked to the major German Banks well in advance of the scheduled "public" release.
I am sure that when the market opens, the news has already been fully taken into account by major players, who have a whole army of analysts.
I've been doing a lot of research on information; specifically the flow of events to the public, and how it affects prices.
When an event E occurs, it becomes known (typically by a reporter), validated, reported to an editor, released to insiders, released to news agencies, and finally released to the public.
At any step along the way, one who becomes aware of E before release has the ability to profit therefrom if they understand its effect on the market. Also, the nanosecond the article is released the HFT news readers parse and profit.
There's different flows for planned and unexpected events.
This is really the essence of profit: leveraging information, right? Technical, fundamental, trade, inside... There's a lot to this.
When an event E occurs, it becomes known (typically by a reporter), validated, reported to an editor, released to insiders, released to news agencies, and finally released to the public.
At any step along the way, one who becomes aware of E before release has the ability to profit therefrom if they understand its effect on the market. Also, the nanosecond the article is released the HFT news readers parse and profit.
There's different flows for planned and unexpected events.
This is really the essence of profit: leveraging information, right? Technical, fundamental, trade, inside... There's a lot to this.
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