A very interesting piece - The risks of fast news analytics
and institutional trading
“Institutional traders in financial markets are
increasingly sourcing information from ‘sentiment’ indicators; analytics
created by computer algorithms from real-time content published by Dow Jones
Newswires, Bloomberg, Thomson Reuters and other wire services. These indicators
can tell traders within milliseconds whether an article is positive or negative
and whether it contains relevant information affecting a firm’s value.
While this “meta-information” can provide a competitive
advantage to its users (mainly high frequency and algorithmic traders like
hedge funds), low-latency signals can lead to unintended consequences when
algorithms automatically initiate trades based on inaccurate information.”