As part of the transformation, traders' roles shifted from making decisions and executing trades to focusing on market analysis and continuously improving advanced analytics models.
FREMONT, CA: Advanced analytics transform the trading landscape, using advanced analytics to your advantage. Traders deploy these tools as markets become real-time to maintain or increase trading margins and maintain a competitive edge. They can do so due to increased availability of market data and satellite, vessel tracking, and weather data; talent skilled in machine learning and statistical algorithms; and computing power, including cloud computing, that runs predictive analytics quickly enough to identify market signals and then trigger trades.
In our experience, using advanced analytics, particularly in volatile short-term markets like intraday power trading, can mean the difference between profitability and the risk of significant income shortfalls. This is because humans cannot process data quickly enough to make rational decisions, particularly when large amounts of data must be dealt with and interpreted quickly.
For example, by optimizing bidding of renewable assets in day-ahead and intraday markets, advanced analytics can lead to a cost reduction of more than 30%. At the same time, we discovered a 90 percent increase in intraday trading productivity due to using an end-to-end automated process powered by advanced analytics engines.
A successful Analytics Transformation in Trading Includes the Following Components:
- Gaining early traction with a successful use case. Attempt to self-finance the transformation; early success will foster a positive mindset and encourage the rest of the organization to embrace analytics.
- Making the business value of each use case explicit and clarifying performance expectations. Companies that begin with IT infrastructure and data enrichment frequently invest heavily but fail to realize the value.
- Changing how businesses recruit new talent and different trader profiles are required, as is creating an appealing workplace for digital and analytics talent.
