"Buy the rumour, sell the news" means...

Prices can drop once the news is out

Priced in | TradeLiga

Good news sometimes makes a price fall. Often the news was already priced in: the market expected it, so the price moved before the announcement.
Prices are built on expectations. What moves them is the surprise: the gap between what happens and what people expected.
Traders measure expectations. Interest rate futures can be turned into odds, like "90% chance of a cut". Economists' forecasts set the bar for jobs and inflation data.
A rate cut with 99% odds barely moves markets. The same cut with 20% odds can make stocks jump and the currency slide.
"Buy the rumour, sell the news": bitcoin climbed for weeks before US regulators approved spot bitcoin ETFs on 10 January 2024. Within two weeks it fell about 20% from its peak.
Common mistake
Myth: "Good news always pushes prices up." Not if people hoped for better. A company can grow profits 20% and still fall if traders expected 30%.
Key takeaway
Before any event, ask what's expected and what would be a surprise. Markets move on the gap.

"Priced in" means... The market already expects itIf people already expect something, they trade on it early, so the price has moved before the news.
Which moves markets more? A surpriseExpected news is already in the price. Only the unexpected part forces traders to change their positions.
"Buy the rumour, sell the news" means... Prices can drop once the news is outTraders buy in hope before the event, then take profits once it happens, which can push the price down.
Futures prices show a 95% chance of a rate cut, and the Fed cuts. What usually happens? Prices barely reactWith 95% odds the cut was already priced in, so the decision itself brings little new information.