back to article How Twitter can see the financial future – and change it

Scottish financial trader James Alan Craig has been charged in the US with allegedly using Twitter to manipulate share prices. That charge raises a fascinating question: can Twitter be used to fiddle the stock markets? According to the US Department of Justice, the 62 year old, from Dunragit in Dumfries and Galloway, caused …

  1. Paul Crawford Silver badge

    Lemmings

    It also illustrates just how fake and insubstantial the whole financial market is. Boy cries "wolf" and shops close, people panic, sheep raped, etc, etc, before anyone bothers to check facts at all.

    1. Anonymous Coward
      Anonymous Coward

      Re: Lemmings

      Yes, I didn't find it surprising at all that Twitter can affect markets. These are, after all, run by people who nowadays consider 15 minutes to be quite long term in terms of trading opportunities - one reason why they want ever faster automated translation, to gain precious seconds of advantage over someone who is slower to translate a piece of news. As trigger happy as a very trigger happy thing.

      1. disgustedoftunbridgewells Silver badge

        Re: Lemmings

        To be fair, if you read a rumour that a company you held stock in was in a bad way ( for example if you read a few months ago that VW was cheating on emissions tests? ) it would be perfectly reasonable of you to sell the stock, just incase.

        I would be surprised if automated trading bots read twitter though.

        1. TechnicalBen Silver badge

          Re: Lemmings

          I would be surprised if the bots don't.

          1. Michael Wojcik Silver badge

            Re: Lemmings

            I would be surprised if the bots don't.

            The actual trading algorithms are stripped too far down, and act too quickly, to get input from social media; but they're tuned using models, and I'd be very surprised if many of those models didn't get input from some NLP process scraping various social-media feeds. It's an easy thing to implement, and since strong (if noisy) correlations have been demonstrated between social-media and market movement, it'd be odd indeed if none of the quants threw it into the mix. More grist for the mill.

    2. MiguelC Silver badge

      Re: Lemmings

      There are other examples, eg. http://www.ft.com/cms/s/0/a2ea7ba2-7fed-11e5-8095-ed1a37d1e096.html

  2. chivo243 Silver badge

    So he manipulated prices?

    did he profit from the manipulations? Can it really be proved beyond a shadow of a doubt that his "tweets" caused the losses?

    1. Mark 85 Silver badge

      Re: So he manipulated prices?

      Well, if you're shorting the stock, a bit of bad press will play nicely into your hands and wallet. People do seem to pay more attention to bad news than good news.

  3. Your alien overlord - fear me

    He's just doing what typical stock brokers do via their old boys network. They are probably just miffed because they didn't think of it before.

    1. I. Aproveofitspendingonspecificprojects

      If only

      Had someone thought of Tweeting such a thing in 2008 the economic crisis could have been averted.

  4. Missing Semicolon
    WTF?

    How is this a crime?

    Unless you count "Company X is in trouble" on the same level as shouting "Fire" in a crowded theatre.

    Since Twitter isn't a journal of record, presumably users are free to tell whatever lies they like?

    1. Anonymous Coward
      Anonymous Coward

      Re: How is this a crime?

      I can remember in a fit of pique at the editor of ExtremeTech for his support of a chimpanzee; joining a completely unrelated forum (Teh Beehive) and using his name. I reprimanded the inhabitants for their bad language.

      The reaction was so unexpected I immediately joined up with the names of all the other frequent posters. Posted anonymously as I can't afford a one way trip to Russia

    2. Michael Wojcik Silver badge

      Re: How is this a crime?

      users are free to tell whatever lies they like?

      Sure. He's not been charged with telling lies; he's been charged with securities fraud. Telling lies was just a means to that end.

      (Incidentally, US law does not, as far as I'm aware, recognize any "not a journal of record" exception to any restriction on expression. There's nothing about it in US libel law, for example, that I can see. But IA most certainly NAL.)

  5. Doctor Syntax Silver badge

    TheConverstation?

    Suddenly we're getting all these items republished from this other site. Is this because the regular columnists have been shoved out? Maybe we should just go there in future instead of el Reg. After all, they have https.

    1. Anonymous Coward
      Anonymous Coward

      Re: TheConverstation?

      Agreed. Also, is this author Tim Worstall's replacement for financial dealings? If so, why?

    2. maffski

      Re: TheConverstation?

      http://theconversation.com/uk/who-we-are

      'The Conversation is a free resource: free to read (we’ll never go behind a paywall), and free to share or republish under Creative Commons licensing.'

      What's the el reg approved term? Ah yes, Freetard.

      1. A Twig

        Re: TheConverstation?

        I believe Mr Worstall even wrote a suprisingly similar article not so long ago, ah, yes:

        http://www.theregister.co.uk/2015/07/22/twitter_is_better_than_google/

  6. xeroks

    I got 66 problems but the cash ain't one.

    The original report i read suggested he made $66 profit. It doesn't suggest he was much of a mover or shaker. What it didn't say was how many followers he had or how far his tweets were rted.

  7. Mage Silver badge
    Facepalm

    can Twitter be used to fiddle the stock markets?

    Silly question. Any news / comment on any platform can be used to fiddle the stock market if enough people that buy or sell the affected shares believe it.

    1. Anonymous Coward
      Anonymous Coward

      Re: can Twitter be used to fiddle the stock markets?

      Silly question. Any news / comment on any anti-social media platform can be used to fiddle the stock market if enough people are stupid or gullible enough to buy or sell the affected shares.

      There Fixed it for you.

      1. Anonymous Coward
        Anonymous Coward

        Re: can Twitter be used to fiddle the stock markets?

        So can those who own newspapers be allowed to buy stocks and shares?

  8. c1ue
    Pirate

    This is pretty silly - tweets by tech industry titans already move the market, as do tweets by the likes of Icahn.

  9. DougS Silver badge

    High Frequency Trading

    We know it moves markets, but many don't realize how it makes those split second decisions. It isn't all about instantaneous prices and order volumes, some HFT systems have a sort of AI component that scans the news wire and yes in some cases Twitter, for actionable information.

    It doesn't take much, if it sees a tweet it sees as negative for a company, i.e. "Oracle CEO rumored dead in plane crash", it could cause it to if not sell Oracle shares at least stop offering to buy them at any price. Other HFT systems see that one HFT system has suddenly dropped all open orders for Oracle, figure something's up, and do the same. Suddenly the floor falls out of the market for Oracle as millions of open orders that support the instantaneous price are gone - there are no market makers anymore now that HFT replaced them.

    If there were no computers participating in the market, on a human scale a trader who happens to see that rumor retweeted might think to himself "I should short Oracle" if he's aggressive or start looking for confirmation from other sources if he's conservative. But this takes minutes, so any drop would be slow and affect only those who see the rumor and act on it before it is debunked. Having computers in charge of it makes it happen almost at once, worldwide.

  10. Anonymous Coward
    Anonymous Coward

    Gambling

    We really shouldn't base our lives, shelter and economic well being on a bunch of coked up rumour gamblers running bets on an unstable feedback looped system, in which the bet itself is part of the feedback mechanism.

    1. YetAnotherLocksmith

      Re: Gambling

      Not least because it usually goes the wrong way.

      Bad stuff trends the share price up, yet announce a few million below predicted profits of a billion+? Sell, sell, sell!

    2. Missing Semicolon
      Trollface

      Re: Gambling

      Yes - last I heard, benefitting from the stupidity of others wasn't illegal. In fact it's the main business model for a lot of financial companies!

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