Live from London: What traders need from their news and analytics – a direct and candid overview
Trading FX is a very real-time experience. When a trader closes a deal, decisions need to be made in a split second, especially where scalping and other short-term, day trading strategies are involved. Today’s news and analytics systems are so advanced, and have become an integral part of the retail FX trader’s essential tools, complimenting […]
Trading FX is a very real-time experience. When a trader closes a deal, decisions need to be made in a split second, especially where scalping and other short-term, day trading strategies are involved.
Today’s news and analytics systems are so advanced, and have become an integral part of the retail FX trader’s essential tools, complimenting everything from scalping to high frequency trading.
Brokers and software vendors are all too aware of this and a sub-sector of software development has grown, today further marked by Acuity Trading’s integration of its sentiment analysis into the ubiquitous MetaTrader 4, a platform which rose to popularity not as a result of its ergonomics or suitability to an open market, but because of its compatibility with automated trading systems such as EAs.
Beyond this, MetaQuotes simultaneously added its own real time news feed today, provided by London-based trader Jarratt Davis, clearly demonstrating the focus in this direction by platform vendors.
To gain full perspective on this, FinanceFeeds today spoke to Andrew Lane, CEO of Acuity Trading in London.
With regard to the requirements of firms in London, Mr. Lane has a clear view of their requirements, especially having met many senior executives of brokerages this week. “Brokers in London have higher costs so they try to differnetiate themselves by offering different products” he explained. “Certainly larger brokers like IG Group and GAIN Capital want to be avantgarde and lead the industry, which plays out well for us as we are futuristic tool.”
By contrast, Mr. Lane explained to FinanceFeeds that many brokers in other regions, particularly Cyprus where a large number of retail firms whose businesses are based on similar principles to each other are looking to differentiate their MetaTrader 4 offerings, the use of a high quality news and analytics service is a popular way of differentiating their MetaTrader 4 experience rather than just focusing on competing with low spreads.
“London is all about the whole quality of the trading experience”
When considering how trading systems and analytics can be positioned in today’s crowded market, Mr. Lane explained “This particular sector is made up of two specific areas. One area is populated by lots of providers trying to create gimmicks. We were talking about this yesterday here in London, for example there is one particular company which was representing to a broker who claimed to be cheap sentiment provider.”
He continued “The company does this by squeezing out the positions, for example presenting data to a brokerage which states that 10 of itsclients are short, 9 are long so it works out the probability accordingly. This is purely a technological approach which uses other data which is already available. In that particular space, none have huge networks of journalists, and as a result most read from a Bloomberg screen and then regurgitate existing data in their own language.”
“As a result of this, there are many firms offering cheap tools at $500 or thereabouts, because they don’t cost much to produce, and just require re-engineering.
“Not many providers have huge networks of journalists, and as a result most read from a Bloomberg screen and then regurgitate existing data in their own language” – Andrew Lane, CEO, Acuity Trading.
The value of original, high quality content
Mr. Lane detailed the importance of ensuring that all content is researched and has a specific value. “Large providers like Reuters and Dow Jones which invest an absolute fortune in creating in depth, original content are valuable because of exactly this, however we both display by the same mechanism, so the user says whats the difference? And that is where the process of differentiation comes. Everyone can display data from various sources, but it doesnt have the same value of content.”
This relates to a very similar consideration faced by those which provide written content. Taking the time and resources to conduct research and generate original, valuable investigative content is essential, because copy/paste journalism is now a matter for punishment by Google, which sends crawlers to sites to check for similarity to other content, and then relegates both the copied and the copy to lower positions.
Mr. Lane explained
“You have to work hard to create unique news and sentiment. I was talking to a firm yesterday who gave me a very good example, which was the Volkswagen emissions debacle. To the users of an FX sentiment tool, Volkswagen’s corporate affairs are of no interest, however let’s say $5 billion was pulled out of Volkswagen as a result of this, then that amount is probably going into dollar denominated assets, so it affects the EURUSD. The sentiment company did not report that Volkswagen was having this problem, but they reinterpreted it for the benefit of their clients.”
With regard to the apparent correlation between academia and trading sentiment analysis, and the software that provides such news and signals, Mr. Lane was keen to demonstrate the different approach which Acuity is taking compared to others. “We are using acedmia as a means of extrapolating the results of our analysis” he said.
“Brokers can market to their clients that they are offering Acuity data. We gave BarcelonaTech a data dump of our data, and they came back with the results, explaining to us where we were strong and where we were weak, so therefore we are using that to help plan the next layer of products.”
“We have a further line of products scheduled for next year, and we will go for another round of fund raising next year, therefore we want to build a next layer of products that is authentic and blows the mind in terms of the computational abilities behind the product itself. We will lengthen the divide between us and the software developers which are not content providers” he said.
Mr. Lane concluded by reiterating the value of a product that creates well researched analytics in retaining and engaging traders over longer periods of time. “Our clients are using our system less as an acquisition tool, more for longevity. If there are dormant clients within the company’s database, then it is very cost-effective to add in a tool that can help reactivate 20 or 30 cloents and engage them especially when acquisition cost is so high these days. Effectively it is a no brainer!” he concluded.