Wall Street Traders Mine Tweets to Gain a Trading Edge

From this USA Today article comes the story of a Johan Bollen, a professor at Indiana University who has authored a book on extracting sentiment information from Twitter.

Bollen analyzed the text of daily Twitter feeds (9.6 million in total) over a nine-month period in 2008 with two mood-tracking tools. One simply measures whether the daily tweets were positive or negative. The other tool sought to measure human mood states by categorizing tweets under six terms equated with different mood types: calm, alert, sure, vital, kind and happy.

He claims that using this technique allowed him to anticipate Dow stock prices 3-4 days later with 87% accurracy. I havent looked at the study in detail, so I don’t know if he’s measuring the overall movement of the DOW, or specific issues.

Mining Twitter sentiment seems to be all the rage. Streambase recently announced a feed based on Twitter sentiment, and Thompson Reuters’ Open Calais has offered similar features for a while now.

What’s news here is not that these techniques are being applied.. I wrote about a similar mashup last June. No; the thing I think is interesting is that you are now seeing this approach become mainstream.

I’m certainly not the first person to advodate this approach, but I gave clear examples in Mashup Patterns (back in 2009) of using this technique to get “Advance Knowledge of an Industry’s Performance” and to “Spot the Underlying Causes of Trends in the Housing Market”. Besides market performance, I wrote about how firms could use these techniques to uncover issues that might threaten the reputation of their brand (or of a competitor’s).

Between Innovation and Commoditization lies a Competitive Gap

Like most innovations, there is an “S” curve that takes you from humble beginnings to ubiquity. The gap in-between these points is where you can create a competitive advantage. I think this latest news demonstrates that Leading Indicator mashups are nearing the right side of this chart.

Firms are perpetually caught in a struggle between experimenting with new products and tools that can give them an edge in their market, and playing catch-up with companies that have proven-out new ideas and deployed them more quickly.

What’s interesting about Mashups is that while some applications of the technology are clearly moving to the commodity stage, many others are not. And “Enterprise Mashups” as a discipline unto itself is definitely still down to the right of the chart.

“Managing Innovation” may seem like an oxymoron, but firms should recognize this maturation curve and try to move items along it more quickly. This helps maximize the time they can enjoy the competitive advantages the new technology yields.

For the “Leading Indicator” pattern, I think that window is closing quickly (if it’s not already closed). But there are still large problem spaces where mashups can offer new and valuable solutions that will help you leap ahead.

One Response to “Wall Street Traders Mine Tweets to Gain a Trading Edge”

  • NEW YORK &151; Tweet this: To gain a trading edge, Wall Street traders are now using clever computer programs to monitor and decode the words, opinions, rants and even keyboard-generated smiley ces posted on social-media sites like Twitter.com.

Leave a Reply

  • HP IDOL OnDemand Assign Role
    The Assign Role API offered by HP IDOL OnDemand lets developers assign a role to a user. HP IDOL OnDemand offers an array of data processing APIs for audio-video analytics, connectors, format conversion, image analysis, indexing, search, prediction, text analysis, user management, and more. Date Updated: 2015-03-26 Tags: [field_primary_category], [field_secondary_categories]
  • HP IDOL OnDemand Delete User
    The Delete User API offered by HP IDOL OnDemand lets developers remove a user from a user store. HP IDOL OnDemand offers an array of data processing APIs for audio-video analytics, connectors, format conversion, image analysis, indexing, search, prediction, text analysis, user management, and more. Date Updated: 2015-03-26 Tags: [field_primary_category], [field_secondary_categories]
  • HP IDOL OnDemand Authenticate
    The Authenticate API offered by HP IDOL OnDemand lets developers authenticate a user against credentials in the user store. HP IDOL OnDemand offers an array of data processing APIs for audio-video analytics, connectors, format conversion, image analysis, indexing, search, prediction, text analysis, user management, and more. Date Updated: 2015-03-26 Tags: [field_primary_category], [field_secondary_categories]
  • HP IDOL OnDemand Restore Text Index
    The Restore Text Index API offered by HP IDOL OnDemand lets developers restore an index at a previous state. HP IDOL OnDemand offers an array of data processing APIs for audio-video analytics, connectors, format conversion, image analysis, indexing, search, prediction, text analysis, user management, and more. Date Updated: 2015-03-26 Tags: [field_primary_category], [field_secondary_categories]
  • HP IDOL OnDemand List Resources
    The List Resources API offered by HP IDOL OnDemand returns a list of the developer's dynamic resources. The response includes the name, flavor, and type of the indexes that you have created using the Create Text Index API. HP IDOL OnDemand offers an array of data processing APIs for audio-video analytics, connectors, format conversion, image […]
  • HP IDOL OnDemand Document Categorization
    The Document Categorization API offered by HP IDOL OnDemand lets developers categorize documents according to a set of categories that they create. To use this API, developers must create a text index with the Categorization flavor, by using the Create Text Index. HP IDOL OnDemand offers an array of data processing APIs for audio-video analytics, […]
  • HP IDOL OnDemand Train Prediction
    The Train Prediction API offered by HP IDOL OnDemand lets developers create a prediction model according to a training data set provided to the API. Data sets are run against several algorithms: Decision Tree, Logistic Regression, Naive Bayes and SVM. HP IDOL OnDemand offers an array of data processing APIs for audio-video analytics, connectors, format […]
  • HP IDOL OnDemand Delete Connector
    The Delete Connector API offered by HP IDOL OnDemand lets developers delete an existing connector configuration. HP IDOL OnDemand offers an array of data processing APIs for audio-video analytics, connectors, format conversion, image analysis, indexing, search, prediction, text analysis, user management, and more. Date Updated: 2015-03-26 Tags: [field_primary_category], [field_secondary_categories]
  • HP IDOL OnDemand Create Connector
    The Create Connector API offered by HP IDOL OnDemand lets developers retrieve information from external systems and update it through IDOL OnDemand APIs. This API allows for creating a connector configuration to connect to the external repository, and specify what content to retrieve. HP IDOL OnDemand offers an array of data processing APIs for audio-video […]
  • AlchemyAPI Face Detection and Recognition Web
    The AlchemyVision Face Detection and Recognition Image API accepts an image file as an URL link. The API will scan a photo to detect facial locations and can recognize individuals present within a photograph, such as celebrities. The API will provide data on bounding box, gender, approximate age and name, if the image is of […]