Professional traders understand the effect of global trends to Foreign Exchange (Forex/FX) markets stocks markets, futures and markets. Things like the decision on interest rates, inflation retail sales and unemployment, industrial productions and consumer confidence surveys business surveys of mood as well as trade balance and manufacturing surveys influence the direction of currency movements. Although traders can monitor these data manually with the traditional sources of news, reaping by using automated or algorithmic trading using low latency news sources is often a more predictable and reliable method for trading that increases profitability while decreasing risk.
The quicker a trader is able to take in economic news, analyse the information, make decisions, use risk management strategies and then execute trades which are profitable, the better they will become. Automated traders tend to be more profitable than manual traders as the automated trading system employs a tried and tested trading strategy based on rules that utilizes risk management and money management methods. The strategy can process patterns, analyze data, and perform trades quicker than a human , without emotion. To make the most of high latency of news sources,, it is crucial to choose the best low latency feed provider. be able to execute a trading plan and network infrastructure that will ensure the most efficient latency possible to the news source, in order to be ahead of the pack on fills and orders or execution.
How Do Low Latency News Feeds Work?
Low latency news feeds deliver crucial economic information to market professionals who speed is the major concern. While the other world gets economic news via the aggregated news feeds of bureau services , or mass media like news websites and radio, television or latency news traders can count on the speedy delivery of crucial economic news releases. This includes employment figures, inflation figures, manufacturing indexes, and more, straight taken from Bureau of Labor Statistics, Commerce Department, and the Treasury Press Room in a machine-readable feed optimized to work with algorithmic traders.
One way of limiting the dissemination of news is through an embargo. Once the embargo has been lifted for a news event reporters record the information on the release into an electronic format. The data is immediately distributed in the proprietary binary format. The information is transmitted via private networks to a variety of distribution centers in large cities across the globe. To receive news information as swiftly as it can be, it is vital that traders choose an acceptable low latency news source who has invested a lot in infrastructure technology. Data that is blocked is demanded by a source to not be released prior to a specific date or time, or unless certain conditions are fulfilled. Media is provided with advance notice to be prepared for the publication.
Also, news agencies have reporters working in Government press rooms, during a predetermined lock-up time. Lock-up data periods are used to control the publication of all news information to ensure that each news agency releases the data simultaneously. This can be accomplished by two methods: “Finger push” and “Switch Release” are used to control the release.
News feeds include corporate and economic news that affect the trading activities across the globe. Economic indicators are utilized to aid in making trading decision-making. News is fed to an algorithm that analyzes data, analyzes, and consolidates and formulates trading suggestions in response to news. The algorithms are able to filter news, create indicators that help traders make quick decisions that will prevent large losses. Charli d’amelio feet
Automated trading software programs allow quicker trading decisions. Microsecond-fast decisions could be a major advantage in the marketplace.
News is an excellent indicator of the volatility of markets and if you are trading in the news, opportunities may arise. The traders tend to react too strongly when news reports are issued, and less when there is a lack of news. Machine-readable news provide historical data via archives that allow traders to check price fluctuations against certain economic indicators.
Every country announces important economic news at certain time periods during the day. Expert traders study and make trades nearly instantly after the announcement is made. Fast analysis is possible by automated trading using a low latency news feeds. Automated trading is an integral role in an investor’s risk management and loss-avoiding strategy. Automated trading is a method of analyzing algorithmic backtests and historical data are employed to choose the most optimal entries and points of exit.
The traders must be aware of when the data is due to be released in order to be aware of the time to monitor the market. For instance, crucial economic data from the United States is released between 8:30 am and 10:00 am EST. Canada releases data between 7:00 between 7:00 AM and 8:30 AM. Since currencies span across the world, traders can always discover a market open and ready to trade.
A SAMPLE of Major Economic Indicators
Consumer Price Index
Employment Cost Index
Producer Price Index
Productivity and Costs
U.S. Import and Export Prices
Employment & Unemployment
Where Do You Put Your Servers? Important Geographical Locations for Algorithmic Trading Strategies
Most investors who trade on news sources use algorithms to trade on platforms located close to the news source and execution site as much as they can. The general distribution areas for news feeds that have low latency providers worldwide include: New York, Washington DC, Chicago and London.
The best places to put your servers are located in highly-connected datacenters that permit you to directly connect your servers or networks to the actual news feed source and execution site. There should be an equilibrium of distance and latency. You should be in close proximity to the news to react to the announcements but also close enough to the exchange or broker to place your order ahead of other traders seeking the most effective fill.
Low Latency News Feed Providers
Thomson Reuters uses proprietary, advanced technology to create an extremely very low latency feed. The feed has been specifically designed for specific applications and can be read by machines. Streaming XML broadcasts are utilized to create the full text and metadata needed for investors to make sure they don’t lose track of an event.
An additional Thomson Reuters news feed features macro-economic events, natural catastrophes and violence throughout the country. A detailed review of news will be released. If the category is at an amount that is reached, the investor’s trading or the risk-management system are informed to initiate either an exit or entry date to the market. Thomson Reuters has a unique advantage on global news in comparison to other companies, as it is an one of the best well-known business news outlets around the globe, and, if not the best-known out of United States. They are able to benefit from adding the world-wide Reuters News in their feed, in addition to third-party newswires and economic data from each of Europe and the United States and Europe. the University of Michigan’s survey of Consumers report is an important news event that publishes data every two months. Thomson Reuters has exclusive media rights to The University of Michigan data.
Other news sources with low latency are: Need to Know News, Dow Jones News and Rapidata which we’ll discuss further once they make information on their services available.
Examples of News Affecting the Markets
A news feed could be a sign of a change in unemployment rate. To make a possibility, rates of unemployment could have a positive trend. Analyses of the past could show that the increase isn’t due to seasonal influences. News feeds reveal that buyer confidence is rising due to the decline of unemployment. Recent reports give a clear indication that unemployment will stay at a low level.
Based on this data, an research could suggest that traders need to short the USD. The algorithm might decide that the USD/JPY pairing will yield the highest gains. Automated trades are executed once the target has been attained and the trade would remain on autopilot until the trade is completed.
The dollar is likely to be expected to continue falling despite reports of a rise in unemployment reported by News feeds. Investors should be aware that many factors impact the price in the United States Dollar. The unemployment rate could decrease but the economy might not be improving. If investors of larger size do not change their opinions about the dollar, the dollar will remain in decline. google suggest primelis
The biggest players usually make their decisions before all of the smaller or retail traders. Big-name decisions can impact the market in a surprising manner. When the choice is based using only information regarding unemployment rate, the assumption could be wrong. Non-directional bias presumes that any major announcement concerning a nation will result in opportunities for trading. Trading accounts with directional bias cover every economic indicator possible, including the responses of important market actors.
Trading The News – The Bottom Line
News influences markets and, if you trade on with the media, then you could profit. There are a few of us who could challenge that. It is a fact that the person who is receiving news feeds in advance of other traders will have the advantage of a successful short-term deal on momentum trades in all markets such as Forex, Equities or Futures. The price of low latency technology has decreased in recent years, allowing traders to join news feeds with low latency and receive the information directly directly from the source. This gives you an advantage over traders who watch television or on the Internet or radio news feeds. In a market dominated by major hedge funds and banks news feeds with low latency definitely offer the edge of big companies for traders of all kinds.