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.
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 …
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.
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.
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.
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
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.)
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.
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