Event Trading

Profiting from Economic Reports and Short-Term Market Inefficiencies

By: Ben Warwick

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Product code: 3418
ISBN: 0786307722
220 pages
Format: Hb
Published by: Irwin, 1996

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Description of Event Trading

As experienced traders can attest, news events often mark the beginning or culmination of major trends. Event trading is a new and exciting technique to trade the financial and commodity markets, and represents a third major approach to trading, distinctly different from the fundamental or technical methodologies. Designed to capture profits from market reactions to news events, event trading provides a systematic approach for exploiting a variety of market-moving events such as economic reports, interest rate changes, and surprises in corporate earnings.

By understanding how markets respond to the news, traders can reap consistent profits. Event Trading is the first book on this subject and is sure to generate great interest among active investors. Specific topics include:

Origins of event trading
Upside and downside breakouts
Creating an event-traded portfolio

As most traders know, finding a profitable trading strategy is only one step on the path to success. The determination of stop-loss levels is a crucial element of trading, and it often separates the winners from the losers. Event trading reveals the author's unique method of selecting the best stop to use for any market condition. Finally the book reveals how a trend-follower can apply event trading to better time entry and exit points, and how to use game theory to adjust position sizes and maximise the return of any system.

Event Trading - Chapter headings

Part I: Event Trading Methodology
1. A New Idea
2. Origins of Event Trading
3. Event Trading 101: Breakout Analysis
4. Maximising Profits with Statistics

Part II: Results
5. Upside Breakouts in the S&P 500 Index
6. Downside Breakouts in the S&P 500 Index
7. Upside Breakouts in the US Treasury Bond Market
8. Downside Breakouts in the US Treasury Market
9. Upside Breakouts in the Eurodollar Market
10. Downside Breakouts in the Eurodollar Market
11. Upside Breakouts in the US Dollar Index Market
12. Downside Breakouts in the US Dollar Index Market
13. Breakout Analysis: Discussion of Results

Part III: Application

14. Stop-Loss Analysis
15. Trading an Event Portfolio
16. Event Trading and Trend Following
17. Event Trading and the Real World

Appendices
A Standard Deviation and Sharpe Ratio Calculations
B Student t-Test Calculations