Tweet your way to profitable trading
Amateur investors are starting to use social media to guide their trades.
Professional investors have used social media for several years as part of their trading strategy Photo: PA
7:00AM BST 27 May 2013
Whether it is on Twitter, Facebook or more of a niche platform, interacting
through social media has become a big part of the way we organise our lives
and access information.
But can it make you money? A variety of providers promise to harness the
online chatter of friends and strangers to allow people to invest more
successfully. At the most basic level this includes forums on which amateurs
or professionals swap news or stock tips; more sophisticated users can copy
star traders or harness Twitter sentiment to help them make trading
decisions.
Professional investors have used social media for several years as part of
their trading strategy, as was illustrated neatly last month when a
hoax tweet suggesting an attack on the White House knocked 0.9pc off
the Dow Jones Industrial Average in a matter of minutes.
The “flash crash” was caused by “algorithms” that react to social media.
Algorithms are computer programs that automate trading decisions.
Using Twitter and its rivals has been becoming more common of late among the
big banks that move the markets. Last month, financial information group
Bloomberg added Twitter to its terminals. The company’s specialist computers
are used on every Wall Street trading floor.
