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Trading News Events: How to Win the Information War

📅 Dec 24, 2024✍️ Poly Team⏱ 15 min read

In most markets, news is something you read. In prediction markets, news is the weapon. Everything moves the second a headline hits the tape. If you’re five minutes late to a news break, you aren’t just behind—you’re the "exit liquidity" for the people who were faster than you.

The Three Stages of a News Break

  1. The Rumor (Speculation): This is where the big money is made. Usually, someone with specialized knowledge or a "hunch" starts buying. The price moves from 30¢ to 45¢ without any public news.
  2. The Break (The Spike): A major news outlet tweets or reports the event. Within 30 seconds, the market jumps from 45¢ to 85¢. This is purely bot-driven speed.
  3. The Confirmation (Settlement): The official source (like the AP or the White House) confirms the result. The price hits 99¢. The trade is over.

Pro Tip: Use the Poly Hawk News Feed

We built our real-time news feed specifically for Stage 2. We aggregate sources faster than the average browser refresh. If you see a headline on our dashboard, check the corresponding market immediately. Often, there is a 10-20 second "lag" where you can still get in at a profitable price before the crowd catches up.

The "Invalidation" Risk

Trading news is dangerous because of "fake news." In October 2023, a fake report about a Bitcoin ETF approval sent markets flying, only to crash minutes later when the report was debunked. Always verify the source. A tweet from "BreakingNews123" is not the same as a report from Reuters or Bloomberg.

Holding Through the Event

The most common mistake beginners make is holding a position too long. If you bought at 40¢ and the news breaks and it’s now at 90¢, take your profit. Don't wait for the last 9¢. The risk of a last-minute reversal is almost never worth that final bit of gain. Real pros sell into the hype.