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[oustriker]

Originally posted by Tony01


Sure, that's momentum trading. Entering on momentum is a good play if the news is very unexpected.However it's riskier than entering before the move especially with listed stocks. Listed stocks tend to gap on news(move in increments of 10c or more),so you'll be chasing the stock 20-30c before getting filled. Once the momentum is gone, LOOK OUT! You should exit once momentum slows.

Tony

Makes sense. Okay, so to further that, hypothetically, if you had a system capable of determining 100% that a stock is going to positively react very very soon to news (thus your comment on the large gaps would be relevant), how would you take advantage of that?

 

[Tony01]

100%, sounds like insider trading!

Hypothetically, I would buy a large amount of the stock and scale out into the momentum once the news was released. Since I entered before the move I could hold some a little longer through the wiggles.

Tony

 

[oustriker]

Originally posted by Tony01
100%, sounds like insider trading!

Hypothetically, I would buy a large amount of the stock and scale out into the momentum once the news was released. Since I entered before the move I could hold some a little longer through the wiggles.

Tony

lol, yeah reading back it does..sorry about that. My intention was to look at it at the extreme case and remove the other factors.

What I meant really was that if you could somehow determine which stock was most likely to move at that current time (or rather, is moving) out of all the stocks in the market, would you be able to get in on the trend - not get in before, but right after it starts - and get out before it died, or would the gaps prevent this from being profitable?

Thanks for the advice.

 

[Tony01]

Yes, it's possible but it depends on several things such as the stock's liquidity and the significance of the news.

The lower the liquidity the more likely to gap more and reduce your odds to profit after the move starts.

The more significant the news the greater the stock should be expected to move, thus increasing your odds to profit after the move starts.

These are somewhat general statements but there is no sure way to play this or any strategy. Nothing is guaranteed.

Tony