In a poll of 50 buy- and sell-side professional conducted by OneMarketData, more than half viewed social media data as a good opportunity to capture alpha on a daily basis.
Yet despite the bullish sentiment, only 18% of respondents say they are using social media data today. However, another 35% say they are currently researching how to incorporate social media into their trading and investment strategies.
The survey was conducted in the wake of the AP Twitter hack that occurred on 23 April. That event revealed potential weaknesses in social media's usability to feed trading and investment strategies, but it also demonstrated the impact the new form of data already is having on financial markets.
While 75%t of respondents said they thought social media could add value to both historical trend and near real-time analysis, 46% said their firms would not be using or investing in the use of social media in 2013. The biggest obstacle to a broader industry adoption of social media usage is its potential for false positive signals, according to 62% of respondents.
Louis Lovas, director of solutions at OneMarketData, says: "As social media data continues to gain validation in the industry, demand for solutions that can harness the power and reduce the risk of this new data source will also grow. As we hit that point, our view is that social media will prove to upend the way market participants use information to trigger trading and investment decisions."