In the technology arms race of high frequency and algorithmic trading, media has focused a lot on how close trading computers are set up to the order matching stations and the lightning speed of trade execution. There is a lot of horsepower in those computers, no doubt about it.
But a bottleneck for trading on news would be having a dumb human reading a news release and figuring out what inputs to feed into the computers. Why have a human do what a computer can do faster, right Skynet?
Enter the business of providing Machine Readable News (MRN). Data providers can sign you up to receive news releases in a format that your trading computer can digest in the blink of an eye.
Here’s a sales brochure from Thomson Reuters on their Machine Readable News service.
And you trust your computer to read it correctly and the other computer to send it correctly, hmmm….
Really? you think people who day trade give a crap about news? Hit the bid,lock an load it’s over…Lunch…trust me it’s more about waiting.
I think you are taking the title too seriously :)
Well, the reality is that many quantitative hedge funds and institutional money managers are currently using machine-readable news and news analytics to factor in the effects of public information on price movements across asset classes. At the end, its still humans building the computer programs, but the technology is advancing more and more that it makes the human more disciplined and efficient when making investment decisions.
A very good point.