The negative connotation that people have with TV and news is not unfounded. There is a lot of misinformation, propaganda, and ‘empty calorie’ content that’s constantly being introduced to watchers. But amongst all this, there are still things that are worth watching the news for. Taking things a notch further and predicting how the stocks will turn out is the sign of a successful trader. Watching things randomly on the TV is not going to be helpful, which is why accurate monitoring is required. We’ll be mentioning a few reasons that make monitoring the news a key player in improving your stocks trading game.
Understanding the News Effect on Wall Street
News isn’t just used for understanding the new trends in a market, but it can be used as an indicator that can actually sway public opinion more than many people think. If stock traders have been expecting a considerable rise in the stocks of a certain company then a rise has been reported, there are two scenarios that are expected to happen. The first one is if the stocks have risen but not to the level that the market was expecting, which will actually cause the stock price to drop a little bit, and traders may wait for its price to reach a lower level before purchasing again. If it has risen to a level that pleased the traders, it may continue rising as investors start purchasing its stocks. News can help traders in picking certain stocks, but they are not the final indicator that should be used to make the final decision. Picking good companies and sticking with them is a good strategy when a trader has faith in the stock they’ve chosen.
Using the Anticipation to Your Favor
Professional traders not only monitor the news, but they try to anticipate them as accurately as possible. Since news outlets use known financial sources in the market, it is possible to stay ahead of other traders who always wait for the news to know what to do. You can use government reports, such as those released by the Bureau of Labor and the US Census Bureau. This process can take some time because you will need to be able to anticipate the news by watching a lot of them and tracing them to their sources. It is much easier to use software that is specifically optimized to help you stay on top of the news. Reviewers of Benzinga Pro swear by the useful tools that most types of traders can make use of on these kinds of platforms. You can utilize software to bring you news from the very same sources that the biggest financial outlets use.
The Impact of Good News and Bad News
The negative news is always an indicator that investors or traders will start selling their stocks before it reaches a non-profitable price for them. Similar to a sinking ship, people gradually start jumping off it unless it is finally miraculously afloat. Stocks aren’t necessarily sinking ships because it’s possible for a stock to easily make a comeback, but plunging down is usually followed by an unfavorable explanation and it’s more than enough for traders to stay away from it. Whether it’s a bad earnings report, a scandal, a shift in the executive hierarchy, political implications, or similar events that translate to potential uncertainty, they can cause a serious decrease in the price of stocks.
Positive news is often a good indicator of a company’s stocks. While it doesn’t always have to mean that the stock price is going to instantly rise, it can indicate good potential in the upcoming days. Individuals are going to hold on to their stocks and new traders will take up interest by purchasing stocks.
Knowing When Bad News is Good News
Good traders know not only the difference between good news and bad news but also when they aren’t being as straightforward as they seem. As a trader, your good news is probably the bad news of other traders. A hurricane can cause a sharp decline in the price of utility stocks, in addition to insurance stocks as well. On the other hand, home improvement and repair services stocks are going to rise for a while. You need to be able to know how to read between the lines to see which stocks are going to rise and which are going to fall instead.
Successful investors are constantly monitoring the news of the world and different industries to gain insight into the right stocks that they can invest in or trade. There is no doubt that this stage comes after being able to read the market carefully and accurately. Give yourself some time to understand the market to be able to analyze the news and use it to your favor.