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Trading socialized

14 April 2011  |  2982 views  |  2

Social media are here to stay. Period. There is no way you can avoid Twitter and Facebook and Linkedin and Foursquare and more and more. Your friends checked-in in a bar and one of them was crowned a Mayor; your @girlfriend bought lettuce; the @person-you-do-not-even-know twitted about a terrible hangover and Lady Gaga released a new single on Facebook. This is fun, no doubt about that. There is business for social media. There is business for celebutante‘s. There is one question left – how can all that become useful for a trader?

Twitter has become a dustbin of emotions. Emotions which people cannot control and which are caused by some real-life events. Should it be an act of terrorism or an experience with glossy iPad2. This is all real-life and it influences trades just as the acts proposed and natural calamities.

Now imagine that you could see the most real-time news possible – not from the news agencies – but from real eye-witnesses? What if you could understand the sentiment of the news, understand their volume, evaluate the authenticity of news and then make a trading decision? Will that affect your trading?

Would you want to wait for an official news source to find the very same information in the very same source and make it available for everyone? I wouldn’t. I would take this all by myself and be the first one to use the competitive edge and earn, earn and earn more.

Think about how social media could affect your trading. Gain advantage and gain profit!

TagsRisk & regulationRetail banking

Comments: (4)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 15 April, 2011, 15:05

@ Arseniy K:

Interesting, but, when it comes to trading, the risks of insider trading seem to loom large.  

Perhaps you could cite an example or two of using real-time news from real eye-witnesses that won't amount to insider-trading?

This is specifically relevant in these days when we're hearing a lot about the insider-trading charges faced by Rajratnam of Galleon for trading on Goldman Sachs stock on the basis of the information supplied by "eye-witness" Rajat Gupta a few minutes after the board meeting he attended, and well before WSJ reported it the next morning. Only this happened via good-old telephone, rather than Twitter / FourSquare.

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A Finextra member
A Finextra member | 15 April, 2011, 15:20

Ketharaman, as an example - it is really easy to predict stock behavior by seeing feedback on company's new retail product on twitter. Large volume of tweets with negative centiment being high could easily point to the failure of the product. 

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A Finextra member
A Finextra member | 15 April, 2011, 15:23

On the other hand, first-hand comments of eye-witnesses of a natural disaster or a plane crash or anything like that. That thing would immediately affect indices. And if you saw that first on twitter before news agencies could make impact - you're the king.

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 15 April, 2011, 16:35

@ Arseniy K:

Okay, got it now. Thanks.

You might find HEATMAP360 useful in this context. It provides realtime social media sentiment of products / companies.  

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