Profiting From Trading With Low Latency News Feeds

Expert traders are able to recognize the impact of global changes on foreign exchange markets, stock markets, and futures markets. Currency movements are affected by factors such as inflation, retail sales and retail sales. This information could be monitored manually by traders using traditional news sources. 

A trader’s ability to receive economic news quickly, analyze it, make decisions and execute trades is a key factor in their success. Because the automated trading system employs money management strategies and risk management techniques, automate traders are more likely to succeed than manual traders. Automated traders can process trends and analyze data faster than humans without emotion. To take advantage of low latency news feeds, it is important to choose the right provider and have a trading strategy.

How do low latency news feeds work?

For market participants who value speed, low latency news feeds deliver key economic data. The rest of the world gets economic news via aggregated news feeds. However, low latency news traders can rely on rapid delivery of key economic information from bureau services and mass media like news web sites, radio, or television. These include unemployment data and manufacturing indexes. The feed is machine-readable and optimized for algorithmic traders.

An embargo is one method to control the release of news. Once the embargo has been lifted, journalists enter the release data in electronic format. The data is transmitted via private networks to various distribution points located near large cities across the globe. It is important that traders use a reliable, low latency news provider who has invested in infrastructure technology to ensure they receive the news data as soon as possible. A source may request that embargoed data not be published before a specific date or time, or unless certain conditions are met. To prepare for publication, the media receives advance notice.

News agencies have reporters who work in closed Government press rooms during a set lock-up period. The lock-up data periods regulate the release and distribution of news data, so that all outlets can do it simultaneously. To regulate the release, there are two options: Finger push and Switch Release.

News feeds include corporate and economic news that can influence trading activity around the world. To facilitate trading decisions, economic indicators are used. An algorithm processes the news and generates trading recommendations based on it. The algorithms can filter and produce indicators, which help traders take quick decisions to avoid large losses.

SAMPLE of the Major Economic Indicators

Consumer Price Index
Employment Cost Index
Situation in the Workforce
Producer Price Index
Productivity and costs
Real Earnings
U.S. U.S.
Unemployment & Employment

Where do you put your servers? Important Geographic Locations to Use for Algorithmic Trading Strategies

Investors who trade news tend to want their algorithmic trading platforms to be as close to the source of the news and execution venue as possible. Global distribution areas for low latency news feed providers are New York, Washington DC and Chicago.

Low Latency News Feed providers

The news are analyzed. The category is reached at a threshold and the investor’s risk management and trading system are notified. This triggers an entry point or exit from the market. Thomson Reuters is regarded as one of the most respected and respected news agencies worldwide. Their feed includes global Reuters News, as well as third-party newswires. Another major news event is the University of Michigan Survey of Consumers report, which releases data two times a month. Thomson Reuters holds exclusive media rights for data from The University of Michigan.

News Examples affecting the Markets

An update on the news feed could indicate a decrease in unemployment rates. The news feed will indicate a positive change in unemployment rates. Historical analysis might show that this change is not due seasonal effects. News feeds indicate that buyer confidence is rising due to the drop in unemployment rates. Reports are strong indicators that the unemployment rate will stay low.

This information may suggest that traders should shorten the USD. The algorithm might determine that the USD/JPY pairing would make the best profits. The trade will automatically be executed once the target has been reached.

Investors should remember that the United States Dollar’s movement is affected by multiple factors. While the unemployment rate might drop, it is not likely that the economy will improve. The dollar could continue to fall if larger investors don’t change their view of it.

Trading the News – The Bottom Line

News is a powerful force in the markets. If you trade news, you can make a profit. It is hard to argue against this fact. It is clear that traders who receive news data before the curve have an advantage in securing solid momentum trades on various markets, whether they are FX, Equities, or Futures. Low latency infrastructure costs have dropped in recent years, making it possible for traders to subscribe to low latency news feeds and receive data directly from the source. This gives them a huge advantage over traders who watch television, radio, or standard news feeds. Low latency news feeds are a great advantage in a market dominated by large banks and hedge fund firms.

Jubin Pejman is a leader in Financial Services Technology Facilitation. FCM360 is a specialist in the establishment of high-performance IT infrastructures that enable Financial companies to connect to mission-critical exchange markets. Find out more about FCM360’s low latency Colocation Services.

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