What’s the Difference between Investing and Trading News?

October 27, 2022 16:09

In this article, you will read about the differences between investing news and trading news and which type might be a fit for your financial goals. Topics include:

  • the frequency of stock market news,
  • timing and frequency of currency and commodity news,
  • short, medium and long-term outlooks.

Investing news versus trading news, which one should you choose? They are often lumped together, but there are significant differences between them in terms of timing, frequency, subject matter, and financial preferences. Once you become aware of the differences, it will make it clearer when to factor in each type of information during your financial decision making.

When company results count the most

If you’re most interested in tracking company results and buying or selling shares based on the fundamentals of a company’s performance, you might prefer investing news.

Investing news is broken down into quarterly, half-year and annual reports from large-cap companies which are listed on public stock exchanges. Earnings seasons last for approximately the first six weeks of each quarter and, depending on the results, can significantly impact on investor sentiment and market trends.

If there is better-than-expected news from public companies, investors tend to gain confidence and sentiment improves, often lifting the performance of a sector or even an entire exchange. The positive mood can be contagious, spreading from one region to the other as investors price in the better performance of the largest and most significant multi-national companies.

If earnings season produces downbeat results, a sell-off might be imminent, along with all the implications of a bear market: falling share prices and negative sentiment.

How far ahead do you plan?

Investing news arrives at predictable stages of the calendar year and the company results might be good, bad or indifferent, but many investors have a long-term outlook on the shares in their portfolios and hold their existing assets no matter what the news is. Others take a medium-term view and might adjust their portfolios in accordance with their quarterly or half-yearly expectations.

During the earnings season, market trends can diverge from the overall economic circumstances. Even if the wider economy is in a slump, investors might concentrate on earnings and the effect on their portfolios instead. This is not the case in the trading markets, where economic indicators have a market-moving effect most of the time.

When prices and the economy count the most

If you gravitate naturally towards news about commodity prices and the value of currencies, you might prefer to follow trading news which comes in the form of economic benchmarks. Analysis about economic performance is often included in trading news, if only as a background for the sake of context.

Economic benchmarks are often short term, such as monthly employment updates. Traders factor in these news events when they make trading decisions, often resulting in knock-on effects on spot prices of commodities like crude oil or gold and the values of currency pairs.

Certain trading styles are based on the short-term effects of economic updates, such as day trading and scalping. The nature of trading news lends itself to these styles, as it can trigger short-term price changes when part or all the estimated 10-million-strong global trading community makes decisions based on the latest economic updates.

Where do trading and investing styles meet?

Is there common ground between trading and investing styles? In recent years and as stocks became more widely available in the online market, the Contract for Difference (CFD) financial instrument has become a method to trade price movements in stocks and indices. Essentially, CFDs can be applied during rising or falling price trends triggered by significant news events. CFDs are traded on multiple underlying assets, including stock market indices and shares.

When risk management counts the most

A word of caution when using trading and investing news. They are an influential source of information, but it would be unwise to rely 100 percent on them when there are other sources that can also support your decision making. These include Technical Analysis, analyst opinions, and expert financial advice from qualified professionals.

To conclude the article, trading and investing news differ in three important ways: whether the news comes from companies or economic benchmarks; in the underlying assets they affect, and in the long versus short-term approaches.

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This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.

Sarah Fenwick
Sarah Fenwick Financial Writer, Admirals London

Sarah Fenwick's background is in journalism and mass communications. She has worked as a correspondent covering Swiss Stock Exchange news and written about finance and economics for 15 years.