Jack A592 Garcia#83

View translation

What is natural language processing (NLP) in forex trading?

NLP allows algorithms to analyze and interpret human language—news, reports, or social media—to extract sentiment and actionable signals. For example, an NLP system may parse central bank speeches for hawkish vs. dovish tones, triggering trades in affected currencies. Institutions integrate NLP into high-frequency trading, reacting to news faster than humans. Retail traders can access simplified NLP tools via sentiment dashboards or specialized services. Benefits: early insights, broader coverage, and reduced manual bias. Risks: misinterpretation of sarcasm, false news, and overreliance on machine outputs. NLP bridges language and trading, turning words into quantifiable signals that increasingly shape forex microstructure.