Trading Catalysts: How Events Move Markets and Create Trading Opportunities
By Robert I. Webb
FT Press
336 pages, $39.99
Robert Webb’s premise is that by analyzing past events and learning how markets reacted to them, investors and traders can reap rewards when future major events occur. Webb provides a detailed look at some recent major events and their impact on stock price movement. He refers to these events as “trading catalysts.” Although catalysts occur frequently, only a small handful result in large market price swings.
In reviewing each catalyst, Webb reconstructs the timeline of the period involved and explains how prices reacted to events. It is amazing to read about huge price swings in the course of minutes that go well beyond any rational level, such as when the Federal Reserve unexpectedly lowered interest rates in January 2001.
Research is one of the cornerstones of this book and the author provides extensive references and endnotes to support his comprehensive analysis of the events. Webb does an excellent job of presenting each catalyst in a crisp and clear manner.
However, the majority of individual investors and non-professional traders will be unable to take advantage of these situations because of the price volatility and their lack of real-time experience in dealing with these events. Reading about past events and knowing what happened is much different than putting money on the table and trading these events and that is the difficulty of implementing the information provided in this book.
Although Webb does provide trading lessons for each of the catalysts he covers, their usefulness for making money trading future events is debatable. This is because no two events evolve in the same way and the market reaction may be different each time.
Professional and sophisticated traders who want to broaden their knowledge of event trading can benefit from Webb’s comprehensive explanations of recent key market events, and market historians and students will enjoy the clear writing that brings each event back to life. However, traders looking for specific rules to benefit from the catalysts may be disappointed.
Leslie N. Masonson is the author of “All About Market Timing” and “Day Trading on the Edge.” Reach him at lesmasonson@yahoo.com.
