This exploits inefficiency #2. After the initial spike, you wait for the market to exhaust itself.
The simplest event trade is the . Before the report, you buy an at-the-money call and an at-the-money put (options) or set two pending buy-stop and sell-stop orders (for futures/forex). This exploits inefficiency #2
: Understanding how a news event in one asset class (like bonds) can create inefficiencies in another (like equities). Before the report, you buy an at-the-money call
—popularized by author Ben Warwick—that capitalizes on temporary asset mispricing caused by major news announcements. Unlike traditional fundamental or technical analysis, event trading focuses on the immediate market reaction to new information. Core Concepts of Event Trading The Catalyst Unlike traditional fundamental or technical analysis
: Strategic entry is based on significant events such as central bank interest rate decisions, Gross Domestic Product (GDP) reports, employment data (like Non-Farm Payrolls), and corporate earnings surprises. Market Inefficiencies