The impact of news on the markets
News and opinion has notoriously influenced the financial markets with news tickers dating as far back as 1897. In today’s information age, investors have access to a paralysing volume of news from fragmented news sources. Investors no longer rely on the traditional news feeds but instead, are migrating towards open source material and social media. But knowing what to read, what’s important and analysing what the news means to their investment portfolios is challenging if not impossible by traditional methods.
News analytics technology such as that utilised by Acuity Trading allows readers to harness the breadth of information now available without the need to read every item. Through automation, drawing out market consensus across the globe is uninterrupted so traders never need worry about missing an important story.
News Analytics – The Automated Extraction of Sentiment from News
News analytics enables understanding of ‘conversations’ that are constantly taking place across the internet. By interpreting these conversations you get an idea of the ‘Herd Thinking’; a collective, quantitative measure of the fears, expectations, and consensus of the market. What are they thinking and feeling, and how are they likely to react to the next news release or major event.
The process is based on linguistic analysis of vast quantities of text; volumes beyond the capabilities of human kind, which until now has been restricted by language, time and the limitations of human information processing. By using these sophisticated linguistic technologies, we can understand the changes in tonality and make predictions of market movement more accurately than before.
News Analytics by Acuity Trading aggregates prolific amounts of information, in all languages and in real-time. With these vast data sets, also known as ‘Big Data’, we are able to draw meaning, otherwise known as ‘sentiment’, far quicker and more reliably than by using conventional data sources.
When this meaning is applied to the financial market, understanding of the mood of the masses emerges; a proven tool in successful trading.