Q&A by Don Bright
PRICE PRECEDES NEWS? HOW?
Don, I have read a lot of your work in Stocks & Commodities, blogs, and other places. You seem to have a pretty good handle on the nuances of stock trading. This question may seem off the wall. I watch news very closely. I rely on news to make my buying decisions almost exclusively, and would like your feedback on two things, axioms, basically. “Price precedes news” — how can that be? And “Buy on rumor, sell on news.” I don’t get it. I hope you understand my question. This really has me baffled. —From xttrader1982
First off, thanks for the nice words, and thanks for buying and reading S&C.
There are many “axioms” in the trading world (for lack of a better term). Wikipedia states that in “traditional logic, an axiom or postulate is a proposition that is not proven or demonstrated but considered either to be self-evident or to define and delimit the realm of analysis. In other words, an axiom is a logical statement that is assumed to be true. Therefore, its truth is taken for granted, and serves as a starting point for deducing and inferring other (theory dependent) truths.”