Experienced traders recognize the consequences 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 this information manually using traditional news sources hbar news, profiting from automated or algorithmic trading utilizing low latency news feeds is a generally more predictable and effective trading method that may increase profitability while reducing risk.
The faster a trader can receive economic news, analyze the data, 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 when compared to a human with no emotion. In order to make the most of the lower latency news feeds it is vital to really have the right low latency news feed provider, have a proper trading strategy and the right network infrastructure to guarantee the fastest possible latency to the headlines source to be able 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 premier priority. While the remaining world receives economic news through aggregated news feeds, bureau services or mass media such as for instance news the web sites, radio or television low latency news traders count 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 info 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 vital that the trader use a valid low latency news provider that's invested heavily in technology infrastructure. Embargoed data is requested with a source not to be published before a certain date and time or unless certain conditions have been met. The media is given advanced notice to be able to prepare for the release.
News agencies also provide reporters in sealed Government press rooms during a defined lock-up period. Lock-up data periods simply regulate the release of news data so that every news outlet releases it simultaneously. This can be achieved in two ways: "Finger push" and "Switch Release" are used to regulate the release hbar news.
News feeds feature economic and corporate news that influence trading activity worldwide. Economic indicators are used 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 to avoid substantial losses.
Automated software trading programs enable faster trading decisions. Decisions manufactured in microseconds may equal a substantial edge in the market.
News is a good indicator of the volatility of a market and in the event that you trade the headlines, opportunities will present themselves. Traders often overreact whenever a news report is released, and under-react if you find hardly any 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 play a part of a trader's risk management and loss avoidance strategy. With automated trading, historical back tests and algorithms are utilized to choose optimal entry and exit points.
Traders got to know once the data is likely to be released to know when to monitor the market. For example, important economic data in the United States is released between 8:30 AM and 10:00 AM EST. Canada releases information between 7:00 AM and 8:30 AM. Since currencies span the planet, traders may always locate a market that is open and ready for trading.
A SAMPLE of Major Economic Indicators
Consumer 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
Nearly all investors that trade the headlines seek to possess 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 must be a balance of distance and latency between both. You need to be close enough to the headlines to be able to act upon the releases however, close enough to the broker or exchange to really get your order in prior to the masses looking to discover the best fill.
Low Latency News Feed Providers
Thomson Reuters uses proprietary, state of the art technology to make a low latency news feed. The headlines feed was created designed for applications and is machine readable. Streaming XML broadcast is used to create full text and metadata to ensure investors never miss an event.
Another Thomson Reuters news feed features macro-economic events, natural disasters and violence in the country. An analysis of the headlines is released. Once 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 has a unique edge on global news hbar newscompared to other providers being one of the most respected business news agencies in the world or even the most respected outside the United States. They've the main advantage of including global Reuters News for their feed along with third-party newswires and Economic data for both United States and Europe. The University of Michigan Survey of Consumers report is also another major news event and releases data twice monthly. Thomson Reuters has exclusive media rights to The University of Michigan data.
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