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I've noticed that some retail traders/investors subscribe to newswire services such as Dow Jones Newswires, Refinitiv/Reuters financial news, Benzinga Pro, etc. Institutional investors probably have better sources of news and they probably use computers to parse news articles in milliseconds, so I don't think retail traders/investors are able to trade on news, because the news is probably priced-in by the time it is read by a human. If financial news is most likely stale by the time they are manually read by retail traders/investors, what's the point in spending money on such news services?

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    You're still ahead of all those that haven't done that I suppose so if there's a stampede starting you might be trampled slightly less.
    – Robert Longson
    Commented Oct 24, 2020 at 7:58
  • Also, if you pay for a time optimized high performance news feed you are getting the same data as institutional investors. And who says they read it manually? It is not like there are not a lot of smaller "retail" investors doing algorithmic trading and - news analysis.
    – TomTom
    Commented Oct 24, 2020 at 8:40
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    Flux, there are no systems that magically read news in English, and then buy or sell based on that.
    – Fattie
    Commented Oct 24, 2020 at 15:19
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    @Fattie are you sure? Many of simpler e-shops can already recommend you what to buy and sentiment analysis is one of the better explored parts of natural language processing. You dont have to understand what is sais or its impact on the economy if you know how the author feels about it.
    – wondra
    Commented Oct 24, 2020 at 17:32
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    A more likely scenario is that the institutional quants have programmed the interpretation of price and volume change in a short time frame, resulting in automated trades. Not that I've paid much attention to them but I have come across web sites that scan for large volume increases early in each session (pre, regular and after hours).
    – Bob Baerker
    Commented Oct 25, 2020 at 2:12

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I don't think retail traders/investors are able to trade on news, because the news is probably priced-in by the time it is read by a human.

Your assumption that it is all priced in is incorrect. Not everything rises (or drops) with the news release nor does price instantaneously gap up/down to its new price and then level out in the seconds after the news is released. News isn't always binary.

I'm not going to chase around for looking for some spectacular examples so here's a more modest one that I observed this week. Kohl's (KSS) made a positive news announcement Tuesday morning. The stock rose 10% fairly quickly and then retraced a bit during the day. For the next three days it gradually rose nearly another 20%.

So without the news, how would one know that there was an opportunity to invest or trade this stock, which in this case, was profitable?

In addition, per your premise that institutional investors use computers to parse news articles in milliseconds, from Wednesday to Friday, where was their edge in this?

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