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

  • Hablaa
    Hablaa provides crowdsourced document translation services. Documents are split into smaller parts and translated simultaneously by multiple translators who only translate into their native languages. Quality is ensured by a final review by a professional translator. Hablaa's Dictionary Translation API translates words to and from more than 140 language […]
  • Dandelion Wikisearch
    With this experimental API, users could find Wikipedia pages if they can't recall the exact title. Dandelion Wikisearch can be useful for developers who work with Internet data and who are interested to add this service in a particular website or application. The site displays the parameters of text and lang as required in addition to limit, offset, que […]
  • Senfluence Social Media Monitoring
    Senfluence was founded in 2007 with the goal to monitor social media. With the API Social Media Monitoring, developers have access to a demo key that will help to import results, search articles in Twitter, Facebook and other social media channels, and monitor in autopilot. The API supports XML and JSON formats. Once developers register, they will choose bet […]
  • MyJobHelper
    MyJobHelper is a site that allows a user to search through a comprehensive database for specific job listings. The site gives the the ability to filter by zip code and by job title. The MyJobHelper API allows developers to integrate MyJobHelper's extensive database and search capabilities into 3rd party applications and web presences. In order to gain A […]
  • BitKonan
    BitKonan is a Croatian-based BitCoin and cryptocurrency trading platform that offers a flat trading rate of 0.29% per transaction. The BitKonan Public API allows access to market data including recent BitCoin prices, highest buy and sell orders, order book, and recent transactions. Using an API key, developers may access the private API to retrieve a user […]
  • Senfluence Sentiment & Influence
    Senfluence is formed by 2 words: sentiment and influence. The goals of this API are to understand sentiments and to analyze the popularity of websites in 13 languages. When users are redirected to the get demo link, they will first see the benefits that include to obtain a sentiment analysis based on positive, negative and neutral feedback and to score docum […]
  • Print From Windows Phone
    Print From Windows Phone offers an API in SOAP format that can be used to send documents to print using the print spooler software. Users need to install the software on the PC to connect to the destination printer, either via WIFI or USB. The site shows 3 steps to use Print From Windows Phone: create an account to have access to 10mb, download the software […]
  • S3Bubble
    The S3 Bubble is a cloud storage and media streaming service that syncs with an Amazon Web Services API. Through storing, selling, and streaming media S3Bubble states they are a revenue generating service. Currently in production, the API is meant to give users and developers more control in implementing the S3Bubble plugins. Date Updated: 2014-09-08 Tags: [ […]
  • IBM Watson
    The IBM Watson Developer Cloud is currently available to a select group of partner developers who are developing “Powered by Watson” applications. These developers are exploring the use of cognitive capabilities of Watson to enhance their business. You can follow the Watson developer site for the latest news and technical how-to guides, API docs, and tools. […]
  • NuPIC
    NuPIC is an open source project written in Python / C++ that implements Numenta's Cortical Learning Algorithm (CLA) which has three principle properties: Sparse Distributed Representations, Temporal inference, and On-line learning. The NuPIC API allows developers to work with the raw algorithms, string together multiple regions (including hierarchies), […]