Trade The News – Profiting From Trading With Low Latency News Feeds
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Trade The News – Profiting From Trading With Low Latency News Feeds
Experienced traders recognize the effects of global changes in Foreign Exchange (Forex/FX) markets as well as stock markets and futures markets. Things like interest rate decisions and retail sales, inflation, industrial productions, unemployment consumer confidence surveys and business sentiment surveys manufacturing and trade balance surveys impact the currency's movement. While traders could monitor these variables manually with traditional news sources, reaping by using automated or algorithmic trading using low latency feeds is a more secure and reliable trading technique that increases the profitability of your business while reducing risk. The quicker a trader is able to take in economic news, analyse the data, take decisions and apply risk management strategies and make trades, the more profitable they'll become. Automated traders are typically more profitable than manual traders due to the fact that automation employs a tried and tested trader's strategy based on rules that utilizes money managing and risk management techniques. The strategy will process patterns, analyse data and make trades faster than a human with no emotion. To make the most of very low-latency newsfeeds it is essential to have the best low latency news feed provider, an appropriate trading strategy and the appropriate network infrastructure to ensure the highest possible speed of latency to the news source in order to outdo the competition in fills and orders or execution. How Do Low Latency News Feeds Work? News feeds that are low latency deliver crucial economic data to sophisticated market players for whom speed is the top priority. While the rest of the world receives economic news via aggregated news feeds, mass media such as news web sites or radio or television, the low latency traders count on lightning fast delivery of key economic news releases. They include figures on employment in addition to inflation data manufacturing indexes, and more, straight through the Bureau of Labor Statistics, Commerce Department, and the Treasury Press Room in a machine-readable feed optimized for algorithmic traders. One way to control the dissemination of news is to use an embargo. After lifting the embargo for news event, reporters enter the release data into electronic bitcoin price format. The data is immediately distributed in a proprietary binary format. The data is sent over private networks to a variety of distribution centers in large cities around the world. To be able to get news information as swiftly as is possible, it's essential that a trader use a valid low latency news source that has invested heavily in infrastructure technology. The data that is embargoed is requested by a source that it not be released prior to a specific date or time, or unless certain conditions have been met. The media is provided with advanced notice in order to prepare for the release. The news agencies also have reporters working in Government press rooms for a specified lock-up time. Lock-up period data periods control the release of all news data to ensure that each news agency releases it at the same time. This can be done in two ways: "Finger push" and "Switch Release" are used to control the release. News feeds provide business and economic news that have an impact on trading activities around the world. Economic indicators are used to assist traders in making decision-making. News is fed to an algorithm which parses, examines, and consolidates, and then makes trading suggestions based on the news. The algorithms are able to filter news, produce indicators and help traders make rapid decisions to avoid massive losses. Automated software-based trading applications allow faster trading decisions. The speed of decisions made in milliseconds could give you a distinct edge in the market. News can be a great indicator of the market's volatility and, if you decide to trade the news, chances will appear. When traders react in a way, they tend to overreact. the news report is published, and under-react when there isn't much news. Machine-readable news gives archived data from the past which allow traders to compare price fluctuations against certain economic indicators. Each country issues important economic news at certain time periods during the day. Advanced traders can analyze and execute trades almost instantaneously when the announcement is made. The ability to analyze trades instantly is provided via automated trading and a low latency news stock exchange feed. Automated trading can be an integral part in a trader's overall loss prevention and risk management strategy. With automated trading, algorithmic back tests from the past as well as historical data are utilized to select optimal starting and ending points. Traders need to know when data will be released in order to be aware of when to monitor the market. For instance, important economic data from the United States is released between 8:30 am and 10:00 am EST. Canada releases data between 7:00 and 8:30 AM. Since currencies are distributed across the globe trading, investors will always be able to find an open market and ready to trade. A SAMPLE of Major Economic IndicatorsConsumer Price Index Employment Cost Index Employment Situation Producer Price Index Productivity and Costs Real Earnings U.S. Import and Export Prices Employment & Unemployment Where Do You Put Your Servers? Important Geographic Locations for algorithmic trading Strategies Most investors that trade in news feeds use algorithms to trade on platforms situated as close to news source and the execution venue as possible. General distribution centers for news feeds with low latency providers are globally: New York, Washington DC, Chicago and London. The ideal locations to place your servers are located in highly-connected datacenters which allow you to directly connect your servers or networks to the feed source and execution venue. There should be a balance of distance and latency between both. You should be in close proximity to the news in order to react to the announcements but close enough to the broker or exchange to get your order in ahead of other traders searching for the most efficient fill. Low Latency News Feed Providers Thomson Reuters uses proprietary, modern technology to create an extremely low quality, low latency news feed. The news feed is designed specifically for specific applications and machine-readable. Streaming XML broadcast is used to produce full text and metadata that ensures that investors don't miss an event. An additional Thomson Reuters news feed features macro-economic developments, natural disasters and violence throughout the country. A detailed analysis of the news is made available. When the news category reaches one threshold that the investor's trading and risk management system is alerted to signal an entry or exit point for the market. Thomson Reuters has a unique advantage in global news when compared with other providers. They are one of the most reputable business news companies around the world, if it is not the most well-known among those outside the United States. They benefit by including global Reuters News in their feed, in addition to third-party newswires and Economic information for both the United States and Europe. the University of Michigan's Survey of Consumers report is another significant news item and publishes data every two months. Thomson Reuters has exclusive media rights to The University of Michigan data. Other providers of low latency news comprise: Need to Know News, Dow Jones News and Rapidata which we'll discuss further when they make information regarding their services more available. Examples of News Affecting the Markets A news feed may signal a change in unemployment rate. For the purposes of the scenario, unemployment rates could exhibit a positive increase. A historical analysis could reveal that the change is not due to seasonal influences. News feeds reveal that buyer confidence is increasing due the drop in unemployment rates. These reports are a clear sign that the rate of unemployment is likely to remain relatively low. The analysis may indicate that traders should be short on the USD. The algorithm could decide that the USD/JPY exchange rate will yield the most profits. An automatic trade would be executed once the target has been achieved and the trade would remain on autopilot until the completion. The dollar may remain in decline despite news of an improvement in the rate of unemployment that are reported on News feeds. Investors should be aware that many factors impact the price that affect the United States Dollar. The unemployment rate might decrease, but the overall economy might not be improving. If investors with larger stakes do not change their perception of the dollar, the dollar could continue to slide. The biggest players usually make their decisions before the majority of retail or smaller traders. The decisions of big players can affect the market in a surprising way. Should the selection be made using only information about unemployment rate, the assumption could be incorrect. Non-directional bias assumes that any major news about a country will create a trading opportunity. Directional-bias trading accounts for any economic indicator that could be relevant, including responses from major market players. Trading The News - The Bottom Line News influences markets and if you trade the news, it is possible to capitalize. There are few of us who would argue against that fact. There is no doubt that the trader receiving news data ahead of the curve will have the advantage on getting a solid short-term trade on momentum trading in different markets such as Forex, Equities or Futures. The price of low latency infrastructure has decreased over the last few years, allowing traders to sign up to a low latency news feed , and receive information directly straight from the source, giving you an enormous advantage over traders who rely on television or on the Internet, radio or standard news feeds. In a marketplace dominated by major hedge funds and banks, news feeds that are low latency provide the advantage of a large company for traders of all kinds.

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