Quick Start Guide for Event Trading

Short on Time? No Problem

Sonal provides many different trading signals for a variety of market moving events, and for new subscribers who have not developed a strategy around each of these, the number of signals can be daunting.

The purpose of this article is to get new subscribers up to speed quickly and making successful trades the next day.

Step 1: Pick a Category

Based on the Sonal scorecard, the highest performing category is clinical trials. Clinical trials tend to produce around one trading signal per day, so for now we will focus on these and ignore the other signals.

Step 2: Evaluate the Event

In the morning prior to market open, take a look at the clinical trial signals and do a quick search on the companies. For instance, you can use Yahoo Finance to see the latest news for the specified company. Here we want to verify the event and ensure that no other news (such as poor earnings results) have been announced simultaneously.

Step 3: Enter After the Fade

In the article The Three Moves for Event Based Trading we illustrate the way stock prices tend to react after a major event. The easiest way to play the event (especially a clinical trial) is to simply wait for the initial fade which typically takes place in the first half of the session. Simply wait for the price to settle near the end of the day and enter a position.

Step 4: Monitor for the Next Week

Over the next week, monitor the stock until the new price level settles in and exit your position. Sometimes this happens in a day and sometimes it is more than a week.

 

Get some practice entering and exiting positions for this category first, and then begin evaluating other signal categories. The key with entering and exiting positions is to be patient and stick to your strategy. Also, we do not recommend playing the “speed game” (ie the “first move”) by attempting to enter into positions too quickly without taking just a minute to evaluate the event and then watching the trend.

Feel free to contact us anytime if you have questions!

 

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