Payday, Loans, finances

The largest price moves and the greatest volatility are the result of reactions to unexpected news. These market events pose the greatest risks to all traders because they are unpredictable and of such great magnitude that they are out of proportion with normal trading risk. It may be possible to trade for a number of years without experiencing an adverse price shock., therefore, many traders do not plan properly for these situations.
Not all price shocks are of such magnitude that they present an unmanageable problem. it may be that price moves are either the reaction to news or the anticipation of news. This news is most often a release of an economic report by a government agency or monetary authority, but can also be a natural disaster associated with weather or earthquakes, or a political event, such as an outbreak of war, a military coup, or an assassination. The U.S. government releases economic data on an announced schedule, many of them at 7:30 A.M. Chicago time, that create regular disruptions to price movements in world economic markets.
The frequency and size of these price moves, triggered by unexpected news, makes these events a natural candidate for a trading system.’ The profit opportunity, however, does not lie in taking a position ahead of the anticipated market reaction, but in studying the systematic patterns that come after the initial price reaction to the news. Because the news is unexpected, you cannot predict the results nor the extent of the reaction; therefore, taking a market position in advance of a government report would have a 50% chance of success and often very high risk. Studies might show that there is a bias in the direction of the price shock due to the way the monetary authority plans economic growth and controls inflation; however, the risks would remain high.