Experienced traders recognize the effects of global changes on Foreign Exchange (Forex/FX) markets, stock markets and futures markets. Factors such as 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, profiting from automated or algorithmic trading utilizing low latency news feeds is a generally more predictable and effective trading method that can increase profitability while reducing risk.

The faster a trader can receive economic news, analyze the info, make decisions, apply risk management models and execute trades, the more profitable they could become. Automated traders are usually more successful than manual traders because the automation will make use of 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 the usual human with no emotion. In order to make the most of the lower latency news feeds it is vital to 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 in order to beat your competitors 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. Whilst the rest of the world receives economic news through aggregated news feeds, bureau services or mass media such as news internet sites, radio or television low latency news traders depend on lightning fast delivery of key economic releases. These generally 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 way of controlling the release of news is definitely an embargo. Following the embargo is lifted for news event, reporters enter the release data into electronic format that will be immediately distributed in an amazing binary format. The data is sent over private networks a number of distribution points near various large cities around the world. In order to receive the headlines data as quickly as you can, it is vital a trader make use of a valid low latency news provider that has invested heavily in technology infrastructure. Embargoed data is requested by way of a source to not be published before a specific date and time or unless certain conditions have already 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 most news data so that each news outlet releases it simultaneously. This can be done in two ways: “Finger push” and “Switch Release” are used to regulate the release.

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 in relation to 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 an excellent indicator of the volatility of a market and if you trade the headlines, opportunities will present themselves. Traders tend to overreact each time a news report is released, and under-react if you have 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 manufactured 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 select optimal entry and exit points.

The majority of investors that trade the headlines seek to possess their algorithmic trading platforms hosted as close as you can to news source and the execution realrawnews  venue as possible. General distribution locations for low latency news feed providers include globally: New York, Washington DC, Chicago and London.

The ideal locations to place your servers have been in well-connected datacenters that permit you to directly connect your network or servers to the actually news feed source and execution venue. There has to 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 truly get your order in prior to 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. 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 compared to other providers being one of the very respected business news agencies on the planet if not the absolute most respected outside of the United States. They have the main advantage of including global Reuters News to their feed as well as third-party newswires and Economic data for the 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 a change in the unemployment rate. For the sake of the scenario, unemployment rates will show an optimistic change. Historical analysis may show that the change isn’t as a result of seasonal effects. News feeds show that buyer confidence is increasing due the decrease in unemployment rates. Reports provide a strong indication that the unemployment rate will remain low.

The big players will typically make their decisions ahead of the majority of the retail or smaller traders. Big player decisions may affect the marketplace in an unexpected way. If the decision is manufactured on only information from the unemployment, the assumption is going to be incorrect. Non-directional bias assumes that any major news about a nation will generate a trading opportunity. Directional-bias trading accounts for many possible economic indicators including responses from major market players.