Why price can move before facts are fully understood.
| Concept | Explanation | |---|---| | Scheduled event | An event with a known date, such as earnings, a central-bank decision, or a token unlock. | | Unscheduled event | Unexpected information such as litigation, security breach, leadership departure, or regulatory action. | | Rumor | Unverified information that may move prices before facts are established. | | Event risk | Possibility of a large price move caused by a discrete development. | | Information asymmetry | Some participants possess or interpret information differently from others. | | Headline risk | Rapid price response to news that may later prove incomplete or misleading. |
The first market reaction is not always the final interpretation. Prices may overshoot, reverse, or continue as participants assess the information's reliability and economic significance.
Key idea: Before acting on an event, distinguish what happened, what was expected, what changed, and what remains unknown.