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Finance professionals most probably have no idea how important specific [fill-in-the-blank] news Yes, they do. There are lots of hedge funds that do nothing b

Finance professionals most probably have no idea how important specific [fill-in-the-blank] news Yes, they do. There are lots of hedge funds that do nothing but analyze news feeds and trade on them all day long.

dandelany 17y ago
...unless their computers are down. :) Seriously though, although there are plenty of algorithms that crawl news all day and trade accordingly, I still think there is money to be made by watching the news with a financial eye. After reading Google's "A New Approach to China" post (which I saw on HN minutes after it was posted), I specifically remember thinking it would be a good time to go long BIDU. And of course, kicked myself after the stock gained ~15% over the next three days. The market responds fast, but consensus is not always reached immediately. I think the opportunity exists because events like this are like tiny "black swan" events, the lasting effects of which are not immediately perceptible to most people, let alone a computer algorithm. It's easy to write a script to trade on something like "expected earnings were 3c/share, actual earnings 5c/share" but this is complex information. The ability to put the pieces together and realize what a significant outage this is, why it is significant, why there is not an easy fix, and what most companies will do about it (prolly sue 'em or switch to Symantec) is more than a computer can do. And I'm sure hedge funds are doing the math right now, trying to estimate the possible damages from lawsuits and how it changes the company's value. But remember, you don't have to beat the fastest hedge funds, you just have to beat most of the market, and you'll still make money. Anyway, it will be interesting to see what happens at market open tomorrow :)
- paraschopra 17y ago
  By definition itself, you can't predict black swan. As they say, day trading is not about making successful moves. It is about making successful moves even when you account for commissions. Reasons everyone is not doing automated trading is because commissions eat up any profit that you can expect to make.
  - billswift 17y ago
    You can sort of predict some "black swans" (a poor term). But to benefit from them you don't need to predict them, just watch for them so you can see them coming before anyone else.
dsplittgerber 17y ago
True, in general principle. In this case, I disagree. MFE was down similar to S&P 500 yesterday. After opening today, not so anymore (-3.6% vs -1%). So market participants clearly did not incorporate the news into their immediate trading yesterday. Also, whilst market participants watch news feeds, there is a clear difference between following news and trading the tape vs having an actual clue as to what a specific news item means in hard money for a company.

dandelany 17y ago

...unless their computers are down. :) Seriously though, although there are plenty of algorithms that crawl news all day and trade accordingly, I still think there is money to be made by watching the news with a financial eye. After reading Google's "A New Approach to China" post (which I saw on HN minutes after it was posted), I specifically remember thinking it would be a good time to go long BIDU. And of course, kicked myself after the stock gained ~15% over the next three days. The market responds fast, but consensus is not always reached immediately. I think the opportunity exists because events like this are like tiny "black swan" events, the lasting effects of which are not immediately perceptible to most people, let alone a computer algorithm. It's easy to write a script to trade on something like "expected earnings were 3c/share, actual earnings 5c/share" but this is complex information. The ability to put the pieces together and realize what a significant outage this is, why it is significant, why there is not an easy fix, and what most companies will do about it (prolly sue 'em or switch to Symantec) is more than a computer can do. And I'm sure hedge funds are doing the math right now, trying to estimate the possible damages from lawsuits and how it changes the company's value. But remember, you don't have to beat the fastest hedge funds, you just have to beat most of the market, and you'll still make money. Anyway, it will be interesting to see what happens at market open tomorrow :)

paraschopra 17y ago
By definition itself, you can't predict black swan. As they say, day trading is not about making successful moves. It is about making successful moves even when you account for commissions. Reasons everyone is not doing automated trading is because commissions eat up any profit that you can expect to make.
- billswift 17y ago
  You can sort of predict some "black swans" (a poor term). But to benefit from them you don't need to predict them, just watch for them so you can see them coming before anyone else.

dsplittgerber 17y ago

True, in general principle. In this case, I disagree. MFE was down similar to S&P 500 yesterday. After opening today, not so anymore (-3.6% vs -1%). So market participants clearly did not incorporate the news into their immediate trading yesterday. Also, whilst market participants watch news feeds, there is a clear difference between following news and trading the tape vs having an actual clue as to what a specific news item means in hard money for a company.