NewsScope Archive from Reuters really doesn’t have the imposing name that it probably should – it certainly doesn’t seem to fit the mission statement of the tool: giving users the ability to construct news based trading strategies. Reuters is one of the few organizations that has the archived databases of textual information matched to the financial tick by tick streams that can allow users to not only develop trading systems using news events, but also to deploy a system in real-time. Certainly, Reuters is one of the top providers of streaming news to the financial markets.
Okay – they can, but should they? It is foolish to think that large financial companies don’t already using these types of systems in-house. I would imagine there are teams of people devoted to the care and feeding and understanding of these systems. Understanding and being part of the process that makes an event triggered trading system profitable is a great deal of effort – this is a complex area. Technical analysis doesn’t have the weighty problem of deriving information from human created unstructured data – commonly known as text. So, Reuters has destroyed a barrier to a type of tool normally used by institutional traders. They have brought the service to the individual trader.
Does this take the edge from the hedge funds and other practitioners of event based trading? Probably not. It may actually create new and more interesting patterns in the market place. Remember – the markets are non-stationary – they are constantly evolving. As soon as a set of patterns are discovered – they begin to disappear. The high priesthood of quantitative traders will most likely not even notice any impact of individuals developing systems with NewsScope.