News Reaction
In prediction markets, a news reaction occurs when probabilities move following a news event, announcement, or report. The market incorporates the new information through trading activity.
Strong news reactions are usually fast and directional. Prices move quickly as participants update beliefs in response to shared information. Not all news produces the same reaction. Confirmed, authoritative news tends to generate clearer and more persistent changes than rumors or speculation.
The quality of the reaction depends on timing and clarity. Well-defined news close to resolution often produces decisive shifts, while early or ambiguous news leads to mixed responses.
For analysts, news reactions are key moments in prediction markets data. They show how efficiently markets absorb information and update expectations.
Why It Matters
News reactions reveal how prediction markets process real-world information. They help users distinguish learning-driven updates from unrelated volatility.
How can news reactions be identified in prediction markets?
News reactions are identified by aligning probability changes with the timing of news events. Sudden, sustained movements following known announcements indicate a reaction. Volume and participation often increase at the same time. Prediction markets data provides the timing needed to confirm this.
What makes a news reaction reliable in prediction markets?
Reliable news reactions are supported by persistence and broad participation. Prices move and remain at new levels rather than reversing quickly. The news source is clear and authoritative. Weak reactions often fade once attention normalizes.
How do analysts use news reactions in prediction markets data analysis?
Analysts use news reactions to measure information efficiency and responsiveness. They compare reaction speed and magnitude across markets. Repeated delayed or exaggerated reactions can signal inefficiency. This analysis improves forecast interpretation and modeling.
Real-World Example
On Polymarket, probabilities may shift sharply after an official court ruling or election update is reported. That movement reflects a news reaction as traders update beliefs.
News Reaction and FinFeedAPI
FinFeedAPI’s Prediction Markets API provides prediction markets data needed to analyze news reactions. Analysts can track time-stamped probability changes and align them with external news timelines. This supports reaction analysis, efficiency measurement, and signal classification. The API enables consistent study of news reactions across prediction markets.