Experienced traders recognize the effects of global changes on Foreign Exchange markets, stock markets and futures markets. Factors such as interest rate decisions, 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 an often more predictable and effective trading method that can increase profitability while reducing risk.
The faster a trader can receive economic news, analyze the data, make decisions, apply risk management models and execute trades, the more profitable they can become.
Automated traders are generally more successful than manual traders because the automation will use 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 a human with no emotion.
In order to take advantage of the low latency, news feeds it is essential to have the right low latency news feed provider, have a proper trading strategy and the correct network infrastructure to ensure the fastest possible latency to the news source in order to beat the competition on order entries and fills or execution.
How Does Low Latency News Feed Work?
Low latency news feeds provide key economic data to sophisticated market participants for whom speed is a top priority. While the rest of the world receives economic news through aggregated news feeds, bureau services or mass media such as news web sites, radio or television low latency news traders count on lightning fast delivery of key economic releases.
These 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 method of controlling the release of news is an embargo. After the embargo is lifted for a news event, reporters enter the release data into an electronic format which is immediately distributed in a proprietary binary format.
The data is sent over private networks to several distribution points near various large cities around the world. In order to receive the new data as quickly as possible, it is essential that a trader uses a valid low latency news provider that has invested heavily in technology infrastructure.
Embargoed data is requested by a source not to be published before a certain date and time or unless certain conditions have been met. The media is given advanced notice in order to prepare for the release.