Using the news to trade shares successfully

by Josh Biggs in Finance on 11th April 2022

As the stock market is affected by natural phenomena and worldly events, traders should rely on news to hone their trading skills. The financial and economic conditions of a company, country, or the world are significantly affected by these events. Therefore, it’s important to stay in touch with the latest news. 

The information delivered by news analytics companies have a significant impact on the stock market. Financial news analytics also affect liquidity and market efficiency as they are the primary source of information for institutional investors. The majority of trading volume in the stock market comes from institutional investors. 

Both retail and institutional investors can use the news to efficiently trade stocks and avoid losses. As media analytics have a considerable impact on the stock market, news can provide a competitive advantage to investors. Hedge funds, for example, rely on low-latency ‘meta information’ to maximize returns on their investments. However, inaccurate analytics can cause unintended consequences when trades are automatically initiated by algorithms based on wrong information. 

Positive analytics naturally cause investors to buy stocks. Similarly, positive economic indicators, an announcement of a new product, a corporate acquisition, and good earnings reports also cause stock prices to go up and build buying pressure. 

If you want to become a successful trader, you must use financial news analytics to predict future market trends. In recent times, financial news can be obtained from a wide range of sources of which the most convenient is the internet. As the internet is accessible from the convenience of your PC or smartphone, you are one click from stock updates and news on market movement. You can use a variety of news sites to learn about the most active stocks. 

Similarly, you can track live movement of stocks anytime through news TV channels. As you watch the live movement of stocks, you can trade on Easy Markets and other share trading platforms. These channels also forecast future stock prices and advise on buying and selling different financial assets, such as stocks, mutual funds, and other securities. 

News analytics constitute a ‘fairly earned’ advantage because they are based on publicly available news. Most studies of stock market behavior use real-time rise and fall of share prices to highlight the impact of news on stock prices, although investors take time to reach the news and adjust their investments accordingly. 

While news analytics provide valuable insight into how markets work, you don’t have to base your buying behavior on these analytics. Following the news may not be a good buying strategy for individual investors, specifically when the relationship between supply and demand is sensitive to the news at the time. Though news analytics improve price efficiency, they do so at the cost of decreasing liquidity and distorting stock prices. 

The opinions offered by market experts from different financial institutions and fund houses can help speculate share prices and change your buying behavior accordingly. As speculative trades have a significant impact within financial markets, you must be aware of the speculations so that you can take immediate action to avoid losses when share prices drop. 

Categories: Finance