Trading On Sentiment Analysis — A Public Relations Tool Goes To Wall Street

Thomson Reuters doesn’t just publish news — it now reads the news as well, measures sentiment with sophisticated linguistic analytics, and distributes the results to both algorithmic trading engines and real live human traders. This is a big step beyond news services which distribute simple news elements such as corporate earnings or unemployment figures that can be read by trading systems.

“We filter out the noise on the Internet and concentrate on the most relevant, impactful and market moving news,” explained Richard Brown, head of quantitative and event-driven trading solutions at Thomson Reuters. “That allows you to make sense of petabytes and petabytes and get to what you care about the most. Our analysis techniques, which look at what company, what context and sentiment, all help you to be able to take sips of intelligent information from the massive unintelligible data firehose.”

High frequency trading (HFT) engines can take sentiment data feeds based on automated analysis of news and electronic media along with market data and news from Thomson Reuters.

Called Thomson Reuters News Analytics , the sentiment analysis places it in a different world from elementized news feeds which works with more structured types of text such as earnings, employment figures or events that can be tagged for consumption by trading engines. Thomson Reuters has long offered a company events feed. Its sentiment analysis is used by scores of clients, about 75 percent of them running quant strategies and most of those in the HFT world.

Behind the sentiment is a lot of powerful processing and recently developed skills in reading news by computer and understanding it. The feed is even able to understand sarcasm, placing it ahead of a lot of people.

Read the entire article at Forbes.