Using ‘Alternative’ Data In Trading

Alternative data that can be described as data sourced from outside including the web, consumers or the satellite play a vital role in decision making for forex traders. A good example is how Geopolitical friction moves the Forex markets as the traders stay alert. This was experienced when the investigations were being carried out on poisoning of the British soil by Yulia Skripal and Russians Sergei.

Alternative data is spreading widely and there is a projection of managers spending one billion dollars and over in order to beat the market averages this year. Following Octavio Marenzi – CEO of Opimas (A consulting firm that focuses on capital markets management), the managers in the past are facing the three options listed below:

• Make use of alternative datasets and successfully embrace a more quantitative approach

• Embrace passive investing, abandoning research and tracking index al at the same time.

• To give up and leave everything alone which means going home.

Many investors are now moving towards the first option. Even though sources are providing different figures on the alternative data industry size, there is no doubt that business is growing quickly without any sign of slowing down.

In 2018, Alternativedata.org showed that Capital group, Fidelity Investments, T.Rowe Price, Invesco, and Neuberger Berman are among the companies that came up with employment of full-time data-focused team.
Refinitive partnered with Battlefin which is an alternative data platform to introduce the alternative data sets to its clients. The partnership aims at ensuring that the alternative data sets are accessible to Refinitives quantitative analytics platform. Refinitive added on saying that the partnership joins in with its existing data sets that include new analytics and social media sentiment, interacting mapping, and commodities data.

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The CEO of Battlefin Tim Harrington also added that financial entities and corporations can make use of alternative data to better their decision making. He said that partnering with Refinitive allows other firms to easily access alternative data in a more streamlined way reducing the struggles that have been faced by data buyers before.

‘Alternative’ Datasets Translate To Meaningful Insights

The search for insights lies at the heart of funding decisions. That urge of sourcing nothing but accurate and unique information coupled with knowledge of the market earlier enough. Information benefit is a very important thing in forex trading, but it can be quite difficult to come through. The government most of the time fails to offer the bigger picture. The high-quality data sets can come in to fill the gaps even though data collection can be quite a tiring task consuming a lot of time.

On the other hand, technology has overturned the game by incorporating artificial intelligence (AI) that allows real-time and continuous information to flow to the financial screens. In addition to that, social media together with the messaging forums among other information sources have become important to the trade investors.

Social media is actually one of the alternative data being used in the current world. Satellite imagery, credit card transactions, communications metadata can offer trading signs that are important in making a better decision in FX trading.