4 Ways Web Scraping Can Improve Your Investing Strategy
Knowing how to invest your money is extremely important, especially when facing a time of uncertainty and market volatility. How do you decide what to invest in when there are so many options that catch your eye?
Do you follow the buzz and put your money in that one company everyone is talking about online? Or do you create a data-based strategy that has better chances of improving your investment returns? The financial industry has already used this data-driven approach for years. So why not try it for yourself or your clients?
Web scraping can and has changed the investment landscape. Big hedge funds and day traders use it to gain an edge over the market and make clever investing decisions.
The days of slowly making your due diligence about the market are over. With web scraping, you can make decisions easier and faster while letting your money work for you through the power of data.
Basics of web scraping
Web scraping is the process of collecting data from public websites and is typically carried out using high-powered software (or bots) that can identify what might be deemed valuable to the user.
The technique really shines when extracting vast volumes of data from different websites. It can be used for various purposes, like machine learning, SEO optimization, and customer feedback monitoring. Or, you can use it for financial data aggregation and market analysis, which makes for a sound investment strategy.
The untapped potential of web analytics generally gets constrained by its unstructured nature. However, if it’s extracted and used correctly, the benefit can be substantial. Let’s see how web scraping can be used to beat the market and improve investment returns.
1. Equity research
Asset management and investment firms regularly deploy web scrapers to collect data for fundamental analysis. For example, data extraction can be used to gather hundreds of financial statements and balance sheets. Compiling them into a structured format allows for a more straightforward process when comparing a company’s performance with its competitors.
Scraping data regarding geographical presence is also helpful in understanding the expansion of companies. A new market usually means growth. Whenever you closely follow a company, you should always be up to date with new developments, as it helps you assess the firm’s performance.
To understand the fundamentals of some companies, you can also scrape pricing data from large eCommerce retailers and estimate the sales volume of certain products. This practice will help you predict if the companies will meet their quarterly targets, which gives you a better sense of their performance. If you’re looking for great web scraping tools to collect eCommerce data with, this article is for you.
2. Market sentiment prediction
Sentiment analysis can be applied to data gathered from various forums and social networks. For example, on Twitter, you can collect data based on so-called “cashtagged” tweets, which allows users to click on stock symbols and follow conversations about specific companies.
Scraping popular financial news outlets for specific keywords is also a great way to track market fluctuations and sentiment. However, note that this kind of analysis works only by selecting trustworthy sources, regardless of the platform. While web scrapers can collect vast amounts of data, it’s best to point your scraper towards specific sources you trust.
Another type of analysis that falls in this category can be done by scraping trends on search engines such as Google. A sharp rise in searches about a specific company may signal both favorable or unfavorable news about it. It’s up to you to do your due diligence after. But web scraping can provide you with the information necessary to make informed decisions faster.
3. Risk awareness and compliance
Publicly traded companies will always face additional scrutiny by the government and regulators. Web scraping can help investors to stay on top of any policy changes that can affect their portfolio. By monitoring government and financial sites, you can stay informed and prepare for any changes that may require generating an exit strategy.
Collecting data from these sites can also explain how companies comply with regulations and laws. Having quick access to this information is vital, as no one is happy to find out they’re investing in illegal businesses. If you have similar concerns about web scraping and the sensitive material it can extract, here’s a comprehensive guide to the ethical and legal aspects of data extraction.
While trading is not exactly investing, it’s still a great way to make your money work for you, and it can definitely benefit from web scraping.
The first thing a trader should do is scrape sites like Yahoo Finance for information about a company. This includes everything from market capitalization, opening and closing price, as well as the volume of trades. These are just some of the factors you can take into consideration when analyzing stocks. An experienced trader can use much more information, which is great, as web scraping excels at collecting significant amounts of data. Analyzing collected data is also easy because it can be stored in a nicely organized excel file.
As a trader, monitoring social media and news outlets daily is essential, as you count on maximizing your short to medium-term returns. However, this is also sentiment monitoring, so you should always track and collect data from experts and day traders you trust.
Scraping in the investment world
Every individual investor wants to be in an advantageous position when it comes to collecting and analyzing data. Web scraping is a fitting tool for the fast-paced world of financial assets, as it can collect information from key websites in no time.
However, web scraping does not guarantee improved returns on its own. With some financial knowledge and a knack for data gathering and analysis, it can prove to be an invaluable tool in today’s information-driven economy.
Web data has no limitation. It’s ever-growing and full of information that can influence the market. Knowing how to harness the power of a web scraping tool can pave the way to better returns.
Want to get started with a web scraping tool that helps you beat the market? Check this list out and start your web scraping journey!