Trading headline disasters, 5

Continued discussion about World Event Trading: How to Analyze and Profit from Today's Headlines

Andrew's book is a worthwhile, albeit light, read. It'll give you a look at the big picture while trading news. For the actual mechanics of how to handle the second half of the trade, see the following.

Laurence A. Connors and Linda Bradford Raschke wrote a book selling for $175 in which they described a strategy for fading swift steep movements in S&P futures, Bond futures, and Currencies that happen when big news items occur. The book is entitled Street Smarts: High Probability Short-Term Trading Strategies

Larry and Linda’s advice is to wait for the move to retrace back to the price the instrument was at when the news event was first publicized. If price reverses back through the starting point in the opposite direction, then go with the reversal. For example, let’s say the S&P futures went up dramatically on the day a big news story was published about a high profile government figure using the services of a bordello and it (the S&P) continued going up for 2 more weeks. If price falls back to where it was on the first day of the news, then sell short on a downside breakthrough at the price where the S&P was on the first day of the news.


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