Headline algos and speakers: the market reads faster than anyone types

[Shadow Trader]

A central bank governor says a sentence at a press conference. Within a few hundred milliseconds, the price has moved. Software parsed the text feed, scored the words, and traded. A human reading the same sentence a second later is already too late.

Retail scalpers sometimes take that personally and try to compete. It doesn't work, and it also isn't necessary.

What works better is recognising what the first move is. It's a reaction to a keyword, a tone, a single phrase pulled out of context. It often overshoots, because the software can't weigh a sentence against the one that follows it. The second sentence, the clarification, the answer to a journalist's question, frequently changes the meaning, and the price changes with it.

That creates a pattern that shows up around press conferences: a sharp first move, a partial or full retrace, and then a slower, more considered direction.

Trading the retrace instead of the spike removes the speed problem entirely. The price is slower, the spread is lower, and the reasoning behind the move is clearer.

The risk is that sometimes the first move was right and there's no retrace. That happens, and missing it is cheaper than chasing it.

How have central bank press conferences been traded, and was it the spike or the aftermath?