Reaction Window

The reaction window is the timeframe immediately following a market-moving catalyst in which initial price discovery occurs — the period when the market rapidly adjusts the stock's price to reflect the new information. For most catalyst events, this window spans the first 1–15 minutes after the catalyst becomes publicly available, and it contains a disproportionate share of the ultimate intraday move.

Understanding the reaction window is fundamental to catalyst trading because it defines both the opportunity and the risk. The opportunity: the fastest, largest moves happen here, and traders with near-real-time information access can participate in the initial repricing. The risk: price discovery in this window is volatile and often overshoots in both directions before settling at a new equilibrium.

Why the Reaction Window Is So Short

The speed of the reaction window reflects the speed of modern market participants. Institutional algorithmic trading systems can detect a new SEC filing, an options flow anomaly, or a wire news release within seconds and execute trades automatically. By the time a retail trader reads a notification, institutional participants have already moved hundreds of thousands of shares. The reaction window is compressed by the speed of these automated participants — which is why even 90 seconds of detection latency advantage matters significantly for catalyst trading.

Premarket vs Regular Session Reaction Windows

Catalysts that fire during regular market hours (9:30am–4pm ET) have reaction windows with full liquidity — tight spreads, deep order books, and rapid price discovery. Catalysts that fire before the open (earnings released at 7am, FDA decisions at 8am) have premarket reaction windows with lower liquidity but often similar or larger percentage moves. The lower premarket liquidity means wider spreads, which increases the cost of participation but also means that individual orders have more price impact — allowing informed early movers to capture more of the move. TradeAI News delivers signals within the reaction window, targeting delivery under 90 seconds from catalyst detection to Telegram alert.