The process of web scraping is one that many traders will be aware of. Using sophisticated software to pull important data from the web to inform market decisions and investment has helped traders improve their margins over the last few years.
Indeed, the process of scraping social media sites like Twitter not only became the basis for what became known as the social media hedge fund, but the subject of a scientific paper. Published by the University of Indiana, the research demonstrated a positive correlation between information gleaned from tweets and the next-day appreciation/depreciation of the NYSE index.
As you’d expect, the power of foresight is an invaluable tool for a trader but the world of web scraping isn’t always one that’s used for positive purposes.
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Beware of Malicious Scraping
While web scraping in the trading world is a great way to gain an advantage in the markets, the technique can also be used by cyber criminals who are intent on damaging a certain company. In a nutshell, web scraping for illegal purposes can take the form of stealing sensitive pricing data in order to undercut a rival or stealing copyrighted content and then passing it off as unique.
According to security software providers Incapsula, web scraping bots can be customized to perform the following functions:
- Recognize unique HTML site structures
- Extract and transform content
- Store scraped data
- Extract data from APIs
However, because all bots have the same purpose (i.e. to extract data) it can be difficult to know which ones are being used for legitimate purposes and which ones aren’t. Because web scraping is a common practice in the financial world and because it’s difficult to distinguish between malicious and legitimate users, there’s a risk to those who don’t have the adequate protection.
Protecting Yourself is Vital
Regardless of whether you’re an individual with your own website or a company dispensing trading information online, someone could be looking to take the content you produce and either use it for their own gain or pass it off as their own. For example, let’s say you were offering a subscription service where members could receive daily market insights for a fee.
Without the proper safeguards, this information could be published elsewhere, costing your business in the long run.
To counter the threat of web scraping, bot mitigation solutions can be used to analyze HTML fingerprints, monitor IP data and carry out behavior analysis to pick up any suspicious user activity. Because web scraping has long been an accepted practice in the trading world, it can almost get overlooked when it comes to site security.
All traders need to remember that web scraping isn’t always positive. If you’re offering services via the web and don’t want your content to fall into the wrong hands, taking the necessary steps to counter malicious bots is crucial.