Analytics special report

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Charting the Next Generation of Analytics

Understanding volumes of market data has always been a challenge for traders, asset managers and investors attempting to make sense of numbers flashing across a screen. Hence, over the years, some of the most effective data platforms have been those with analytical tools that help traders make sense of that data, that add context, and provide insight into more than just the in-the-moment price changes. After all, a single price out of context and with no reference to its movement has little meaning, and one of the best ways to display that movement over time is visually.

With the rise of algorithmic trading and the increase in machine-readable data inputs, some of these analytics became entirely computerized, relying on technologies that can crunch vast volumes of data to create their own context without the need of visual displays geared at human traders.

But as it becomes harder to compete in the high-frequency trading space, and as instruments and markets become more complicated, traders in markets with lower levels of automation have discovered new value in analytics' ability to provide insight where machines as yet cannot. And for many at the institutional level, the next stage of analytics will involve more use of black-box engines to perform complex calculations at low latency. But for many more-including those at both the institutional and retail level- while analytics will look very different from those of the past, they will continue to be visual processes: it's just that these will be more complex than before, to account for the fact that higher volumes of faster and more granular data exist today, and will serve the purpose of providing precision insight into these volumes of new data types.

And to accompany these new analytics, expect to see new types of delivery mechanisms to broaden their availability, such as the use of "app store"-like platforms operated by vendors that want to offer compelling analytics but are unable-or see no need-to build their own to compete with established providers. These platforms in turn will also provide a channel for specialist providers to gain a wider audience.

The next generation of analytics is full of opportunity. And taking advantage of the opportunity to leverage these new tools will help investors grasp opportunities in the marketplace that they wouldn't have spotted without them.

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