Let's assume that big earning surprises affects stock prices. But how long time after the quarterly/yearly report has been released do this show in the price of the stock? Is it generally shown after a few milliseconds, minutes or longer?
How quickly do the market respond to big earning surprises?
- Thread starter Hammertimr
- Start date
Faster than you can crack a fart!
To "trade the news", you'd have to (1) have a real-time news source, (2) have your eyes glued upon it 24/7... and even then, the big boys would beat you to the punch. While you're pondering, "what should I do and what does it mean for my trade?", you'll be left in the dust.
Maybe not that surprising that it is a matter of milliseconds. Would probably be possible to create a script that analyses an earnings report and make a decision in about a second or two, but probably not fast enough then 
all you need is to sign up to the right data package...
http://financial.thomsonreuters.com...ents/pdf/financial/ultra-low-latency-news.pdf
http://financial.thomsonreuters.com...ents/pdf/financial/ultra-low-latency-news.pdf
That's a losing proposition, in my opinion -- to try to buy if the earnings reports is good and sell short if it's bad...after you hear of the results.
Most firms have robots that read the text and respond immediately. However, if you understand the company very well, you can arb the robots as they will often miss the important issue in a release.
For example, Apple might ship 12MM iphones which beats estimates. The robots will bid the stock. However, Apple might also say that they gave those phones away for zero revenue. The humans will then sell the stock.
It's the reason you see so much volatility just after the results. You have robots with their speed and humans with their non-linear reasoning skills competing.
For example, Apple might ship 12MM iphones which beats estimates. The robots will bid the stock. However, Apple might also say that they gave those phones away for zero revenue. The humans will then sell the stock.
It's the reason you see so much volatility just after the results. You have robots with their speed and humans with their non-linear reasoning skills competing.
Right. But it's more complicated than that. You also have robots competing with other robots, and humans competing with other humans, that weigh different aspects of the press release differently and thus come to different conclusions. And then you have robots and humans that do not look at the fundamental data i.e. the press release at all, instead just react to the price change, either reinforcing it (momentum) or fading it (regression to the mean trade).
So it's really a very complicated but interesting cocktail.
1. you can have a "good" report, and
the stock can still go down, can't it? [and the reverse]
2. i've read that an insider trade can even go bad
marc
the stock can still go down, can't it? [and the reverse]
2. i've read that an insider trade can even go bad
marc