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Author's profile photo Ido Shamgar

Smart Trading: Adding Precision to Big Data-Inspired Trading Strategies

Since it emerged as a Wikipedia entry circa 2010, Big Data – the trend and technology innovation – has grown in lock-step with the volumes of structured and unstructured data it embraces. In 2014, Big Data is mainstream – and capital markets seem to have acknowledged that it’s a “game-changer.”

Of course, in capital markets, the name of the game is sustained profitability over extended time periods.

In its white paper, Big Data and SMART Trading: How a Real-Time Data Platform Maximizes Trading Opportunities, SAP contends that trading organizations can look to enriched Big Data as the catalyst for new and profitable smart trading strategies. Extracting information from the Big Data cauldron with precision and integrating it with other sources is at the heart of smart trading.

The real game-changer, then, is a well-constructed data enrichment process focused on answering the basic questions:

  • What type of strategy do we need?
  • What signals are we looking for?
  • What data is required?
  • Which data sources can we use?
  • How do we organize, integrate, and aggregate the data?
  • Which analytics tools are available?

Working with structured and unstructured data, the data enrichment process transforms high-volume, low-information data and into low-volume, high-information content. Big Data – including market data, reference data, econometric information, fundamental data, e-news feeds and sentiment data, weather information, and traffic patterns – becomes information on price momentum, spreads, trading volume, volatility, and liquidity. Precisely the input needed to inform trading strategies.

Complex Event Processing Fuels Real-Time Precision in Trading

Ah, but a game-changing data enrichment process relies on a technology enabler. Here, SAP makes the case for an integrated platform that combines in-memory computing technology and event-stream processing, enabling real-time, complex event processing (CEP). Such a platform provides an environment for the rapid development, testing, and deployment of data enrichment processes – performing enrichment and integration tasks in milliseconds or less.

SAP offers CEP – and more – with a real-time data platform that includes:

  • Event stream processing for real-time market data analytics and event processing
  • In-memory database technology for collection and real-time processing of massive data volumes
  • Column-oriented database for a historical market-data repository
  • Replication server for integration and aggregation multiple complex data sources

You’ll find more detail on data enrichment and other smart trading processes in the SAP white paper. And, as always, SAP Services can offer insight and expertise with analytic services.

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