Computers read news and trade on it quickly (Reuters)

Discussion in 'Automated Trading' started by notouch, Jun 25, 2007.

  1. notouch


    I found this article interesting. It doesn't tell us anything we don't already know but gives some interesting examples:

    "News mining is not just for stock trading, either. For example, French investment bank BNP Paribas (Paris: FR0000131104 - news) ' <BNPP.PA> "weakness indicator" counts the number of times the words weak, weakness or weakening are used in the Federal Reserve's Beige Book report on regional U.S. economies.

    More than 50 references in a report typically signals the economy is on the brink of a recession.

    Hedge fund investors familiar with news mining technology said an algorithm based on the "weakness indicator" could easily be created to sell dollars and U.S. stocks and buy bonds if more than 50 references were found.

    "What the machine is looking for is the same thing that the human is looking for. It can just find it more quickly," said Richard Brown, business manager of NewsScope, a company owned by Reuters Group Plc <RTR.L> that produces machine-readable news.

    Rather than just highlight words or phrases, some of the most sophisticated news mining platforms can take multiple strands of news from wire agencies and Web sites and score the significance of various items.

    For example, headlines from a reputable news organization with the words "Middle East," "tension" and "hostility" would be given a higher score, especially if oil prices are rising, than an anonymous blog entry with the same key words.

    The same headlines would be given an even higher score if other reputable news agencies carried similar stories.
  2. cweb


    Yeah nice article. Thanks for sharing it with us although I must agree with what you said- it doesn't really say anything new, just talks about interesting examples..