Why do stock prices change dramatically in value within seconds after release of financial results? After all, it is impossible to analyze such a large amount of information in such a short time.
In: Economics
Because to make money on this sort of trading you dont just need to be right, you need to be right _quickly_.
Imagine news comes out that is bad for company A. Trader 1 sells immediately either on a gut reaction or because they have some computer setup doing a fast calculation and trading automatically. Trader two takes time to really consider all the variables in depth, which takes a day, and then decides to sell.
Trader 1 sells their stock right away for $100. Trader two has to sell their stock a day later when the price has already fallen, for $50. And so it pays to be fast.
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