While many traders rely either on machines or on the benchmarks in the development of its strategy, the trader Ben Warwick (Ben Warwick) focuses on market reaction to the news. Warwick has developed its own method of trading, which he calls "event-trading".
Warwick first became acquainted with the financial markets during the study of the University of North Carolina, where he received a M. B. A. During his studies he learned about the research "unexpectedly announced yield» (earnings surprise studies) on the stock market held in the 70's. The essence of these studies was that when, according to Warwick, "released the performance figures of the shares is much more than anticipated, the trend for stocks lasted for 60 days. He said: "Until now, some fund managers are trading according to the unexpected announcement returns. I decided to take this idea and see whether you can apply the same to the futures markets. Over the past six years, Warwick has improved its method of "event-trading" and even published a book under that title.
While this smacks of discretionary trading, Warwick has developed a method of whole system: "I try to maximize all organize and to eliminate emotion." Event Trading, he said, "non-linear, it is not a system of tracking the trend. It only fixes the rate at which the market responds to information. I watch how the market responds to news. " An example of event-driven trading may be the publication of monthly data on the employed population and their impact on the bond market. "If the market will rally after the statistics, but by the end of the day the market closes in the upper 20% of this range, then I will consider it as a buy signal," - says Warwick. At the same time, the important role played by the estimated price: "To enter the market immediately after the publication of figures - this game 50 to 50. For example, you can get a bear's reaction to the statistics, which you think may be a bull, and still receive a signal to sell. I draw attention to how the market reacts to such information. "Bull" in its report on the basis of employment, which throws up prices within one day, after which the calculation occurs in the lower 20% range, Warwick viewed as a sell signal.
If we talk about time frames, the Warwick is not engaged in intraday trading. Average transaction Warwick lasts from one to five days.
After some investigation, Warwick has identified the most effective and influential types of messages for specific markets, used in the event-trading. At this "late" stage of recovery Warwick points to data on orders of durable goods and the employment report as the two most effective factor for event-driven trading in the bond market. Warwick, however, inclined to the industrial complex: market grain and livestock. "I have had several cases of major success on agricultural products", - he said. Based on their knowledge of markets of livestock and their reaction to the monthly report on livestock, Warwick said: "If the cattle market there is a strong trend upwards, and if issued" bearish "report on livestock, it is much better to buy on the compensation falls. To turn bullish trend in the opposite direction, it takes three, four or five such reports. Market animals need time to absorb information. "
Responding to a question that is necessary for the success of a futures trader, Warwick said: "It is homework, you should keep statistics and to be sure that the identified market failure".
"In order to continuously make money, need to be ahead, and find a way to identify market inefficiencies, where you can make a profit - these are the main factors", - he said in conclusion.
