Twitter Enables Traders to Act on News Before It Breaks
Investment managers are developing software to monitor vast amounts of real-time Tweets, allowing them to act on the information before it reaches the general public
© RIA Novosti. Alexander Kryazhev
15:49 31/08/2014
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MOSCOW, August 31 (RIA Novosti) - Entrepreneurs are increasingly using Twitter to keep track of their rivals’ and consumers’ sentiments, believing it to be a one of a kind tool to find new trading opportunities, CNN reports.
A growing number of investment managers are developing software to monitor vast amounts of real-time Tweets, allowing them to act on the information before it reaches the general public. "It's about opening the global market and investing and trading in a transparent way," says Yoni Assia, founder of eToro, the first social network for investing and trading both real and virtual currencies.
Another pioneer in the field is Paul Hawtin, who is now launching Cayman Atlantic, a boutique investment management firm where he will be working out innovative trading strategies based on real-time information on the firm's capital and his clients. "Trend-following has been a successful trading strategy for over a century and that forms the core of our investment process. What makes us different from any other trend-following hedge fund is the data we use," he says. The preliminary results are inspiring he adds, citing his whopping 10.78 percent return on a simulated account which was operated from July 2012 to late April 2013.
Additionally, Bloomberg recently announced it is now the first financial information platform to feed real-time Tweets of market professionals directly into their investment operations, after the Securities and Exchange Commission (SEC) approved the use of Twitter and Facebook for detailing companies’ performance.
A good example showing the impact of Twitter on markets is the bogus White House tweet that came out back in April 2013 and read as follows: “BREAKING: Two Explosions in the White House and Barack Obama is injured”. This shortly sent the market indices crashing with the Dow Jones falling by 1 percent, The Market Watch writes.
Another incident dates back to March 2013, when Royal Caribbean cruise ship arrived in Florida with 105 passengers aboard who faced a Norovirus outbreak. An hour after the news hit headlines the Royal Caribbean Ltd. share price fell by 2.9 percent.
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