When trading, there are many news events that have an effect on the market. You always need to be kept up in the loop, knowing about everything from natural disasters to President Trump’s tweets. If one is not constantly informed about the news, they can find themselves losing large chunks of their account relatively quickly.
Here are a few more examples of major volatility generators in the financial markets that traders need to watch out for.
Natural disasters
Natural disasters constantly occur around the world. We’ve seen tornadoes, hurricanes, earthquakes, volcanic eruptions, and other natural disasters affecting millions in a negative way. Although these events are tragic, there are a select few that benefit from these events. According to professors Tchai Tavor and Sharon Teitler-Regev from Department of Economics and Management at the Max Stern Yezreel Valley Academic College in Israel, the index goes down on the first day of the disaster and for the next two subsequent days. This is a good piece of information to know for traders looking to make quick gains.
Terrorist attacks
Just like a natural disaster, no one wants a terrorist attack to happen, but unfortunately they occur too. The same professors as stated above found a similar pattern to the one above with a natural disaster. The index goes down on the day of the attack and the day after. For both a natural disaster and a terrorist attack you will want to short the index and flip your position after a day or two depending on which event it was.
Trump’s tweets
Trump’s constant parade of tweets oftentimes leads to serious shifts in markets. In 2016, Trump posted a tweet claiming that fighter jets, produced by Lockheed Martin, were wildly expensive.
The F-35 program and cost is out of control. Billions of dollars can and will be saved on military (and other) purchases after January 20th.
— Donald J. Trump (@realDonaldTrump) December 12, 2016
Shortly after the tweet was posted, Lockheed Martin’s stock dropped by 4%. This is not the only market Trump has affected with his tweets. In the past we have seen oil, S&P 500, and US10Y all be effected by the president’s tweets. Since no one knows what will be tweeted until it happens, it is key to create a twitter account and follow Trump, along with other accounts which can provide quick news updates.
Central banks and surprise interest rates
Based on a country’s economic situation, central banks raise or cut interest rates. Sometimes, changes in interest rates are expected, but especially during economic crisis, they can be surprising. Interest rates have a strong hand when it comes to how the stock market is doing. Especially when a change in interest rates is unplanned, it can be a surprise to traders and alter market prices drastically.
Now you know that their many ways a market can shift swiftly and unexpectedly out of the blue. This might make one nervous to take a position in the market, but you shouldn’t be. If you have the right technology and follow the right accounts you will always be prepared for the worst. First you must have a twitter account. Once you do that, you should follow these three accounts: Bloomberg, Donald Trump, and fastFT. These three accounts will cover 99% of the major breaking news that can alter market prices.
Economic events with a significant surprise
There are many economic events that are tracked in order to keep up with market news and trends so we won’t be surprised when the market shifts. Although we are aware of these events, we are not always prepared for the magnitude of surprise these events can impose. One must gain an understanding in real-time as to how to read these events in order to trade accordingly.
Summary
For day traders, there are so many platforms that need to be open at all times in order to trade quickly. You need your online trading platform, news outlets, twitter accounts, and other platforms that help with trading. That seems like a lot and can be really confusing.
In BetterTrader.co we are aware that the value of all this information is priceless. BetterTrader.co platform integrates all of these aspects into an app and web platform while giving trade ideas, market insights, and so much more. One really useful aspect is our TwitterScanner that gives you voice alerts about market news so that you dont have to be looking at your screen all the time. If you are interested here is the link to better understand what we do.
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