Trading News Feeds with Low Latency Pays Off
As experienced traders know, global movements affect foreign exchange (Forex/FX) markets, stock markets, and futures markets. Interest rate decisions, inflation, retail sales, unemployment, industrial productions, consumer confidence surveys, business mood surveys, trade balance, and manufacturing surveys all influence currency movement. While traders can manually monitor this information using traditional news sources, automated or algorithmic trading using low latency news feeds is a more predictable and successful trading strategy that can increase earnings while reducing risk.
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The faster a trader can receive economic news, analyze data, make decisions, apply risk management models, and execute trades, the more profitable they can become. Automated traders are often more effective than manual traders because they use a tried and true rules-based trading method that employs money management and risk management strategies. Trends will be monitored, data will be analyzed, and trades will be executed faster than a non-emotional person.
You’ll need the correct low latency news feed provider, a strong trading technique, and the right network infrastructure to ensure the minimum possible latency to the news source to make use of low latency news feeds. This will enable you to outperform the competition in terms of order entry, fulfillment, and execution.
Low Latency News Feeds: What Are They and How Do They Work?
Low-latency news feeds provide crucial economic data to informed market participants that place a premium on speed. While the rest of the world relies on aggregated notizie feeds, bureau services, or mass media such as news websites, radio, and television for economic news, low latency news traders rely on lightning-fast transmission of key economic releases. Jobs data, inflation figures, and manufacturing indexes are all available in a machine-readable feed received directly from the Bureau of Labor Statistics, Commerce Department, and Treasury Press Room, and intended for algorithmic trading.
An embargo is a method of limiting information transmission. After a news event’s embargo is lifted, reporters enter the release data into an electronic format, which is then delivered in a proprietary binary format. The data is sent to several distribution facilities located near key cities across the world via private networks.
A trader must use a dependable low-latency news provider that has spent heavily on technical infrastructure to acquire news data as quickly as possible. A source may request that data not be published until a certain date and time have passed, or until certain requirements have been met. The media is given advance notice to prepare for the release.
Reporters from news organizations are also detained for a length of time in government press rooms. Lock-up data periods simply prevent all news data from being disseminated at the same time by all news outlets. “Finger push” or “Switch Release” are the two techniques to control the release.
Economic and corporate news that affects global trade activity is highlighted in news feeds. Economic indicators are utilized to make trading decisions easier. The information is fed into an algorithm, which parses, consolidates, analyzes, and proposes trades based on it. The algorithms might filter news, give indicators, and help traders make split-second decisions to prevent large losses.
Using automated software trading systems, trade choices may be made more swiftly. Microsecond decisions could provide you with a significant competitive advantage.
News is a good indicator of a market’s volatility, and trading the news can help you locate chances. Traders tend to overreact when there is a lot of news, and they tend to underreact when there isn’t much news. Historical data is available from machine-readable news archives, allowing traders to compare price fluctuations to certain economic indexes.
Each country releases important salute news at different times of the day. Advanced traders analyze and execute transactions almost quickly after the announcement is made. The instantaneous analysis is possible with automated trading and a low latency news source. Automated trading may be part of a trader’s risk management and loss avoidance strategy. In automated trading, historical back testing and algorithms are employed to discover the optimum entry and exit points.
Traders must know when the data will be released to know when to monitor the market. Important economic data is released between 8:30 and 10:00 a.m. EST in the United States, for example. Canada gives information between the hours of 7:00 and 8:30 a.m. Because currencies are traded all around the world, traders will always be able to locate an open market.
A Range of Important Economic Indicators
- Consumer Price Index is the abbreviation for Consumer Price Index.
- Employment Costs Indicator
- Costs and Productivity Indicator of Producer Prices Earnings in Real-Time Based on Employment Situation
- Prices of Imports and Export in the United States
- Unemployment and Job Opportunities
Where Should Your Servers Be Located?
Important Geographical Locations for Algorithmic Trading Strategies
The great majority of news traders prefer to have their algorithmic trading platforms housed as close as feasible to the news source and execution venue. New York, Washington, DC, Chicago, and London are among the general distribution locations for low latency news stream providers.
Your servers should be housed in well-connected data centers that enable you to link your network or servers directly to the real-time news feed source and execution location. There must be a balance between distance and latency between the two. You need to be close enough to the news to react, but you also need to be close enough to the broker or exchange to place your order ahead of the mob looking for the best fill.
Low-Latency News Feed Providers
Thomson Reuters uses proprietary, cutting-edge technologies to provide a low-latency news feed. The news feed was created with applications in mind and is machine-readable. Streaming XML broadcast is used to offer complete text and information to investors, ensuring that they never miss an event.