NYT: Automatic Trading Linked to News Events

Posted on December 11, 2006
Filed Under Investments, Trading

Today, the Reuters Group begins selling two trading services that allow subscribers to set up automatic trading orders based on the news. They will give subscribers the ability to mine past and present Reuters news articles in real time and automatically buy, sell or hold a stock based on market-moving events.

The mining and sifting of news take place in computers dedicated to algorithmic trading; that is, automatic buying and selling based on complex mathematical formulas that aim to pick the optimal time to trade a stock.

Although algorithmic trading on news events already exists, Reuters says its system is the most advanced. “If an event breaks somewhere in the world, you want to be able to respond to that, or manage the event risks,” said Richard W. Brown, business manager for Reuters NewsScope, as the new program is being called. “At a very simplistic level it’s about speed.”

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