Things You'll Need:
- Multiple television stations (optional)
- Multiple computer monitors (optional, but highly recommended)
- Access to several real-time global news sources
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Step 1
Be the most aggressive newshound you know. Day traders using news playing cannot afford to be lazy. There are millions of traders all around the world watching the same news channels and listening to the same rumors you are, and some of them have been doing this for decades. You have to be ready to act at a moment's notice in reaction to either good or bad news.
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Step 2
Know that some people buy stocks in a company when the news is bad, which is the opposite reaction to the one you'd expect. This is why you have to know the minds of the other traders. For long-term blue chip holds, such as car companies and the Dow fund, many traders feel confident that the people who hold these stocks are more conservative than those holding Silicon Valley securities, and they may sell in response to bad news. In contrast, more aggressive investors in chancy stocks may do the opposite.
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Step 3
Watch the market. When bad news about a stock or an industry in which you hold stocks hits the market, and you believe you have a lead on other day traders, you can sell stock you don't own yet. This is called "short selling." You are paid the price for that stock, but you have a few days to deliver it. You then buy the stock before you need to deliver it at what you hope will be much lower prices.
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Step 4
Make fast purchases of stocks you believe are on an upswing due to good news you have just heard. Then sell these stocks in a few days when you believe the reaction to the good news has caused the stock to reach its short-term peak. This is the opposite of the bad news short sell, but with both the timing of the trade is critical.
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Step 5
Use news that is truly "brand new," not simply proof positive of earlier rumors. If the news is simply a rumor coming to fruition, then the news may already be calculated into the market price. You may not make any money trading it, since the market reaction to the news has probably already occurred.
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Step 6
Use news playing for day trading only if you are willing to make a serious commitment to sitting in front of your computer monitors. If you are considering news playing and day trading so that you can have weekdays off of work, this may not be the trading methodology for you.
