Trade The News – Profiting From Trading With Low Latency News Feeds
Expert traders are aware of the impact of global changes to Foreign Exchange (Forex/FX) markets stocks markets, futures and markets. The impact of factors like interest rate decisions in addition to inflation, retail sales, industrial productions, unemployment consumer confidence surveys as well as business sentiment surveys manufacturing surveys and trade balances affect currency movement. While traders could monitor these data manually with traditional news sources, benefiting from algorithmic or automated trading using low latency feeds is usually a more accurate and reliable trading strategy that could increase profits while decreasing risk. The faster traders can take in economic news, analyse the data, take decisions, use risk management strategies and trade which are profitable, the better they can become. Automated traders are typically more profitable than manual traders because the automation will use a tested trader's strategy based on rules that utilizes money management and risk management strategies. The strategy can process patterns, analyze data and perform trades quicker than a human with no emotion. To take advantage of the lower latency feeds,, it is crucial to choose the right low latency news feed provider, an effective trading strategy, and the correct infrastructure for network connectivity to ensure the fastest possible latency for the news source to stay ahead of competitors on fills and order entry or execution. How Do Low Latency News Feeds Work? Low latency news feeds deliver crucial economic information to market players who consider speed to be the top priority. While the rest of the world receives economic news via combined news feeds, bureau services, or mass media like news websites or radio or television, the low latency news traders are guaranteed quick delivery of the most important economic releases. They include figures on employment, inflation data, and manufacturing indexes directly through the Bureau of Labor Statistics, Commerce Department, and the Treasury Press Room in a machine-readable feed optimized for traders using algorithmic trading. One method to limit the release of news information is an embargo. Once the embargo has been lifted on news, reporters submit the release information in electronic format, which is then distributed in an exclusive binary format. The data is sent over private networks to multiple distribution points in various cities across the globe. In order to receive the news information as quickly as possible, it's essential that a trader use an acceptable low latency news source that has made substantial investments in technology infrastructure. Data that is blocked is requested by the source to be published prior to a particular date or time, or unless certain conditions have been fulfilled. The media receives advance notice in order to prepare for the release. Additionally, news agencies employ reporters in sealed Government press rooms, during a predetermined lock-up period. Lock-up period data periods control the release of all news data so that every news outlet 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 include corporate and economic news, which influence trading activity worldwide. Economic indicators are utilized to facilitate trading decisions. The news is fed into an algorithm that reads the news, analyses, and consolidates it, then gives trading advice based on the news. The algorithms can filter out the news, produce indicators and assist traders in making split-second decisions to avoid substantial losses. Automated software for trading allows quicker trading decisions. Microsecond-fast decisions could equate to a significant edge in the marketplace. News is an excellent indicator of the market's volatility and, if you decide to trade the news, chances will present themselves. When traders react in a way, they tend to overreact. a news report is released, and under-react when there is a lack of news. Machine-readable news provide historical information through archives that enable traders to back test price movements against certain economic indicators. Every country announces important economic news at specific times of the day. Advanced traders analyse and make trades nearly instantly as soon as the announcement is made. Fast analysis is possible by automated trading using a low latency news feeds. Automated trading could be a element of a trader's loss prevention and risk management strategy. Automated trading is a method of analyzing the backtests of the past and algorithms are utilized to select optimal entrance and exit locations. Traders should know when data is released so that they be aware of when to watch the market. For instance, the most important economic data from the United States is released between 8:30 AM and 10:00 AM EST. Canada releases information between 7:00 and 8:30 AM. Because currencies are spread across the globe, traders may always find a market that is open and ready to trade. 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 Many investors that trade on news sources utilize trading platforms that are hosted as close as possible to the source of the news and execution site as much as they can. General distribution locations for low latency news feed providers are globally: New York, Washington DC, Chicago and London. For more detail please visit:- The ideal locations to place servers is in well-connected datacenters that allow you to directly connect your servers or networks to the feed source and execution site. There must be a equilibrium of latency and distance between the two. It is essential to be in touch with the news in order to react to the announcements however, you must be close enough to the broker or exchange to get your order in ahead of others looking for the best fill. Low Latency News Feed Providers Thomson Reuters uses proprietary, cutting-edge technology to deliver a low latency news feed. The news feed has been designed specifically for the purpose of applications and machine readable. Streaming XML broadcasts are used to produce full text and metadata to ensure that investors don't miss an event. A different Thomson Reuters news feed features macro-economic events, natural disasters and violence throughout the country. A review of the news is made available. When the category has reached a threshold the investor's trading or risk management system is alerted to initiate the entry and exit point from the market. Thomson Reuters has a unique advantage when it comes to global news, compared to other providers being one of the most well-known business news outlets in the world , if it is not the most well-known out of United States. They are able to benefit from adding global Reuters News in their feed along with third-party newswires and Economic data for both their customers in both the United States and Europe. The University of Michigan Survey of Consumers report is also an important news event that releases data twice monthly. Thomson Reuters has exclusive media rights to The University of Michigan data. Other news providers with low latency are: Need to Know News, Dow Jones News and Rapidata which we will discuss further as they make details about their services available. Examples of News Affecting the Markets A news feed can signal a change in unemployment rate. For the sake of the scenario, unemployment rates will show a positive change. Analyses of the past could show that the increase isn't caused by seasonal changes. News feeds show that buyer confidence is rising because of the decline on unemployment. Reports provide a strong indication that the rate of unemployment will remain in the low range. With this information, analysis may suggest that traders must reduce the USD. The algorithm could decide that the USD/JPY exchange rate will generate the highest profit. A trade on autopilot will be completed when the target is reached and the trade would continue to run on autopilot until it is complete. The dollar may remain in decline despite news of an improvement in the rate of unemployment that are reported on the news feed. Investors must keep in mind that a variety of factors influence the price of the United States Dollar. The unemployment rate could fall however, the overall economic situation may not improve. If investors with larger stakes do not change their perception of the dollar, the dollar may continue to fall. The major players typically take their decisions ahead of all of the retail or smaller traders. Big player decisions may affect the market in an unexpected manner. If the decision is made solely based on information about unemployment statistics, then the assumption will be incorrect. Non-directional bias assumes that any major news about a country will result in 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 moves the markets and if you decide to trade the news, it is possible to make money. There are a few of us that can argue against that fact. It is a fact that the trader who receives news data ahead of the curve has the edge in obtaining a profitable short-term trade on momentum trading in different markets, whether FX, Equities or futures. The cost of low latency networks has fallen in recent years, making it possible to join the news feed with low latency and receive data from the source, giving you an enormous edge over traders watching television or the Internet, radio or standard news feeds. In a marketplace dominated by major hedge funds and banks, low latency news feeds certainly give the big company edge to traders who are not even individuals.

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