Buy the rumor, sell the news
“Buy the rumor, sell the news” is a trading strategy that can be used by traders aiming for short-term profits in various financial markets. Here’s how it works: Speculation and Anticipation: Traders buy a security based on speculation about an upcoming news event. This speculation could be related to earnings reports, product launches, regulatory decisions, or other significant announcements. They anticipate that the news will have a positive impact on the security’s price. Price Movement Before the News: As the anticipated news date approaches, market pricing tends to move higher in anticipation of the event. This movement occurs because traders are buying in advance, expecting positive outcomes. The saying “buy the rumor” refers to this phase of accumulating positions before the news is officially announced. Selling When the News Is Confirmed: Once the news is officially announced, traders sell their positions. This is the “sell the news” part of the strategy. The rationale b...