Short selling on breaking news?

>>1496516

BUY ON ARTICLE 50

in theory it would work, but only because of the greater fool theory. Sure the plane crash is going to have a material effect on the company's profits, so a small fall in the price is justified.

The thing is, most people dont trade stocks with valuation models, most people see "pokemon go is a hit?!" BUY NINTENDO.

So by shorting on the news of a plane crash, you're hoping that you're the fastest moron to the draw, which, with algorithmic traders nowadays, you never are the fastest.

Instead you're the bagholder. Enjoy.

>>1496529
How the fuck is a algorithm supposto know to trade on a immediate event like a plane crash

>>1496532
its actually pretty easy.

You datamine twitter and news sources. Algorithm detects the company name and "plane crash" and instantly sells.

Remember way back in the day someone hacked the Associated Press' twitter account and claimed that there had been an attempt on Obama's life. Within minutes the S&P500 crashed, only to recover a few hours later as everyone realized what happened.

https://www.theguardian.com/business/2013/apr/23/ap-tweet-hack-wall-street-freefall

>>1496516
Nintendo was a slam dunk though.

In response to Pokemon Go news, the stock basically doubled, even though Nintendo only owns 30% of pokemon, and that a million users on the App doesnt necessarily translate into the bottom line AT ALL.

All the retards piled-in to nintendo without doing their homework as to what value PokeGo would actually add to the company's bottom line.

Weeks later, it is revealed nintendo didnt make shit on Pokemon go, and the stock crashed. I knew it was fucking coming. It was so obvious.

Sadly its hard to US citizens to short nintendo. No ADRs, only international mutual funds are able to get exposure to it.

>>1496540
If you predicted it why are you here anon and not fucking 10/10 models on your own island after short selling Nintendo?

>>1496516
It can work well. $DGLY blows up when shit with police happens; riots. Recently it blew up when those cops got sniped and was a notorious cash cow during Ferguson. it seems more rewarding to figure out what will blow up in response to an event as opposed to what will die, but that is likely just bias because I have only ever gone long based on news.

OP here, does anyone have any actual success stories of shorting and making a profit after seeing some shit live on the news?

>>1496536
Okay anon but I mean I'm sitting there naked in my chair with a laptop with my eyelids taped open and a ball gag in my mouth staring at a multi-screen of FOX CNN NBC etc. and the MOMENT I see something awry I investigate and short sell before any other retard can log into Twitter and mouth diarrhea

>>1496544
I just told you.

You cant short sell nintendo unless you're a Japanese investor. International mutual funds could do it, but I cant do it from my trading platform.

>>1496562
there has been research into this area, you cannot beat the algorithm's trading in this way. It's a form of latency arbitrage that you are proposing, and the algos have you beat every time.

You can go ahead and try to write an algo and get it executed by your prime broker.

But you have no idea what any of that means, so you can stfu and be thankful i wasted any time trying to teach your ignorant piece of shit ass.

>>1496569
Woah there fella

>>1496569
I'm aware of latency arbitrage, so you can fuck off. Sounds like somebody woke up to a dead hooker. Latency arbitrage has nothing to do with what you said, you said the algos use data mined info, and if it's so early that there is no data to be mined off social media etc. then algos would be irrelevant, and even if they did still trade before me, I would still be making a profit because other retards without algos would still be selling off and it would drop even lower

>>1496595
latency arb has everything to do with what I said.

Its an arbitrage (riskless profit) that is created by the latency between news coming out, and it becoming priced-in to the market.

>>1496595
Thus, your trading strategy is just as i said. It relies on the "greater fool" theory. You're essentially betting on the fact that you're faster than other traders, which, i'm sorry to say, is simply not true.

>>1496595
Problem is that news these days are not first reported first on TV.
Oftentimes if something major happens random local social media accounts start reporting and then after they have reached a credible and critical mass some major social media accounts start retweeting it and it goes on TV.

>>1496609
Okay then how about this, what if I were to be looking out of my window, and saw a southwest plane going down, and immediately traded on that, would it be profitable? If i'm absolutely one of the first few to know about it before it hits any news at all.

>>1496619
2 things.

First, its possible you'd get busted for trading on "material non-public information". Such are insider trading laws in this country that this could forseeably be mnpi.

lets say its legal though

You find material PUBLIC information, and manage to trade on it before others. Assuming that markets are efficient, the price will fall after you sold it (though your selling it, in itself, alters the price) . Then you can cover your short at a lower price.

you'd better hope your trading costs are small enough to justify it though.

Also, shorting is not as simple as people think. All short sales have to be borrowed, and there is a supply and demand for borrowing stocks to short sell, this is the "cost of carry" of the short. For certain companies, the cost of shorting can become prohibitively high, so even if you KNOW the stock price is going down, its not profitable to short it.