Section 2 · Market Mechanics
News & Stock Reactions
Why the stock moves before you finish reading the headline.
The market prices in news before you finish reading the headline.
Algos react in under 1ms; momentum traders hunt the second (human) wave that follows. Your edge is reading whether the move has legs, not being first.
3 things to know
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Algorithms react in under 1ms — retail traders cannot compete on speed.
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The second wave is where momentum traders operate — reading if the move has legs.
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Volume after the spike confirms whether the move is real or fading.
Dive Deeper
<1msAlgo reaction timeto news hitting the wire
50%+Avg FDA approval movefirst-day price change
3 minSecond-wave windowtypical human reaction lag
Key vocabulary — tap each card
Practice
True or false?
Statement 1 of 4
Being first to see news gives retail traders an advantage over institutions.
Did you know?
A fake AP tweet about a White House bombing (2013) crashed the S&P 500 150 points in 90 seconds — then fully recovered. Algos read the tweet before humans could verify it.