Twitter sentiment-based trading platform set for launch
11 January 2013 | 7470 views | 0
The outfit behind a now-defunct Twitter sentiment-based hedge fund is bidding to tap the technology for a new online trading platform.
The DCM Dealer platform, launching on Monday, will give traders access to the firm's algorithmic sentiment analysis technology to help them make investment decisions.
The algorithm was developed by academics who caused a stir in 2010 when they published research showing that analysing the content of daily Twitter feeds using two mood tracking tools enabled them to predict with an 87.6% accuracy the daily ups and downs in the closing value of the Dow Jones Industrial Average.
DCM Capital licensed the algo in 2011, testing it in the real world through a £25 million hedge fund. Despite a decent performance of just under two per cent growth - ahead of the market and the average hedge fund - the operation was quickly and quietly shut down.
Now, the firm is looking to incorporate the feature into a spread-betting platform, giving securities a rating, between zero to 100, to show how positive the social media buzz around them is.
Paul Hawtin, founder and CEO, DCM Capital, told Bloomberg: "Financial markets are driven by greed and fear but we've never had a way to quantify emotion before. We monitor 350 million tweets daily, 2.5 billion weekly. So now investors can monitor investors' sentiment and human emotion on specific instruments in real time."