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Becky Ashley
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Financial copywriter with an interest in options trading.
  • 2013 Trading Trends The Information Revolution  0 comments
    May 22, 2013 6:46 AM

    The ability to analyse information and its impact within the trading world is critical. The 2013 trader must harness information, utilising within a reactive portfolio.

    January marked a period of re-evaluation as traders across the world seek out future trends likely to impact the global financial community. Inevitably right here right now we are experiencing the "January effect": a trading term coined to define December sellers' buyback into January markets. A unique combination of events and market sentiment can lead to notable trading patterns. The speed or spread of news can impact market movement.

    Beyond pure media outlay, the social web is a small space, information flows at vast speed. As news travels faster so too does the pace of market change; 2013 traders will need to tap into real time information resources such as IG Insight.

    In many ways a trader's journey into economic events can be dictated by regular indicators, they are already looking for or information alerts beyond their normal communication flow. Event alerts outside of the "expected" drive volatility, speculation and trading debate. Outside of volatile events traders can lean on core economic indicators or routine news, for instance the regularity of Non-Farm Payrolls.

    Filtering saturated information into trading insight is a key challenge for the 2013 trader. Applying a time frame to accelerating news cycles can assist in news evaluation. Will this change be short term, perhaps worthy of an intra-day spread or a longer strategic outlook? For instance resolving the recent Fiscal Cliff deadline may serve simply as market pain relief, with the broader concern of a budget ceiling remaining in play.

    A small social space is also a highly connected one. At what point is a global tipping point reached where a decision in Japan begins to impact Australian FX Trading? Connections between international news and economics are highly interwoven and equally subject to market pick up rate. Trading skill relies on the capacity to sort the wheat from the chaff, to understand why and how news folds into the financial landscape.

    Calculating information impact is a challenging and constantly evolving formula. Trading is often grouped into distinct schools of thought: the fundamentalists and the technical. Events tend to align within fundamentals yet patterns and charts can be used to contextualise and even prioritise event impact.

    Institutions are growing increasingly creative in their attempts to understand the spread of economic sentiment. Hiona Mao and Xiao-Jun Zeng conducted a study into the relationship between stock market and twitter "moods". The report produced by IU Bloomington's School of Informatics and Computing, aptly titled "twitter mood predicts the stock market", has attracted significant interest.

    There is no single way to interpret an economic event. Collective perception combines with expectation in the shape of forecasts to create market impact. Volatility itself heightens events beyond regular news flow and our increasingly connected society offers a platform for information spread beyond media distributors.

    Please refer to the Product Disclosure Statement from IG. Trading can result in losses that exceed your initial deposit and you do not own or have any interest in the underlying asset. Always consider the risks that are involved before investing. The above information should not be considered as financial advice.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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