Experienced traders recognize the effects of global changes on Foreign Exchange (Forex/FX) markets, stock markets and futures markets. Factors such as for instance interest rate decisions, inflation, retail sales, unemployment, industrial productions, consumer confidence surveys, business sentiment surveys, trade balance and manufacturing surveys affect currency movement. While traders could monitor these details manually using traditional news sources, profiting from automated or algorithmic trading utilizing low latency news feeds is an often more predictable and effective trading method that may increase profitability while reducing risk.
The faster a trader can receive economic news, analyze the information, make decisions, apply risk management models and execute trades, the more profitable they are able to become. Automated traders are often more successful than manual traders since the automation will use a tested rules-based trading strategy that employs money management and risk management techniques. The strategy will process trends, analyze data and execute trades faster than a human without emotion. In order to make the most of the reduced latency news feeds it is essential to truly have the right low latency news feed provider, have a proper trading strategy and the right network infrastructure to ensure the fastest possible latency to the headlines source in order to beat your competition on order entries and fills or execution.
How Do Low Latency News Feeds Work?
Low latency news feeds provide key economic data to sophisticated market participants for whom speed is a high priority. While the rest of the world receives economic news through aggregated news feeds, bureau services or mass media such as for instance news the websites, radio or television low latency news traders depend on lightning fast delivery of key economic releases. These include jobs figures, inflation data, and manufacturing indexes, directly from the Bureau of Labor Statistics, Commerce Department, and the Treasury Press Room in a machine-readable feed that is optimized for algorithmic traders.
One method of controlling the release of news is an embargo. After the embargo is lifted for news event, reporters enter the release data into electronic format which can be immediately distributed in an exclusive binary format. The data is sent over private networks a number of distribution points near various large cities round the world. In order to receive the headlines data as quickly that you can, it is essential a trader use a valid low latency news provider that’s invested heavily in technology infrastructure. Embargoed data is requested by a source to not be published before a particular date and time or unless certain conditions have now been met. The media is given advanced notice in order to prepare for the release.
News agencies likewise have reporters in sealed Government press rooms during a precise lock-up period. Lock-up data periods simply regulate the release of all news data so that every news outlet releases it simultaneously. This can be achieved in two ways: “Finger push” and “Switch Release” are accustomed to regulate the release.
News feeds feature economic and corporate news that influence trading activity worldwide. Economic indicators are accustomed to facilitate trading decisions. The headlines is fed into an algorithm that parses, consolidates, analyzes and makes trading recommendations based on the news. The algorithms can filter the headlines, produce indicators and help traders make split-second decisions in order to avoid substantial losses.
News is a great indicator of the volatility of a market and in the event that you trade the headlines, opportunities will present themselves. Traders tend to overreact whenever a news report is released, and under-react if you find almost no news. Machine readable news provides historical data through archives that enable traders to back test price movements against specific economic indicators.
Each country releases important economic news during certain times of the day. Advanced traders analyze and execute trades almost instantaneously once the announcement is made. Instantaneous analysis is made possible through automated trading with low latency news feed. Automated trading can enjoy part of a trader’s risk management and loss avoidance strategy. With automated trading, historical back tests and algorithms are utilized to pick optimal entry and exit points.
The majority of investors that trade the headlines seek to have their algorithmic trading platforms hosted as close that you can to news source and the execution venue as possible. General distribution locations for low latency news feed providers include globally: New York, Washington DC, Chicago and London.
The perfect locations to put your servers are in well-connected datacenters that enable you to directly connect your network or servers to the actually news feed source and execution venue. There should be a balance of distance and latency between both. You have to be close enough to the headlines in order to act upon the releases however, close enough to the broker or exchange to get your order in in front of the masses looking to discover the best fill.
Another Thomson Reuters news feed features macro-economic events, natural disasters and violence in the country. An analysis of the headlines is released. realrawnews When the category reaches a threshold, the investor’s trading and risk management system is notified to trigger an access or exit point from the market. Thomson Reuters features a unique edge on global news in comparison to other providers being one of the very most respected business news agencies on the planet or even probably the most respected outside the United States. They have the advantage of including global Reuters News to their feed as well as third-party newswires and Economic data for both United States and Europe. The University of Michigan Survey of Consumers report can also be another major news event and releases data twice monthly. Thomson Reuters has exclusive media rights to The University of Michigan data.
A news feed may indicate an alteration in the unemployment rate. For the sake of the scenario, unemployment rates will show a confident change. Historical analysis may reveal that the change isn’t as a result of seasonal effects. News feeds reveal that buyer confidence is increasing due the reduction in unemployment rates. Reports provide a strong indication that the unemployment rate will remain low.
The big players will typically make their decisions just before most of the retail or smaller traders. Big player decisions may affect the marketplace in an unexpected way. If your choice is made on only information from the unemployment, the assumption is going to be incorrect. Non-directional bias assumes that any major news about a nation can provide a trading opportunity. Directional-bias trading accounts for several possible economic indicators including responses from major market players.
