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Sentiment analysis ‘trending’ tools gaining traction in both Forex and Equity trading worlds
Those of you who have recently visited popular financial portal MarketWatch.com, a Dow Jones / Wall Street Journal brand, may have noticed a new ‘Trending on Twitter’ bar at the bottom of their home page. Rather than reporting on the latest escapades of celebrities, the bar is a sentiment analysis tools developed by Market IQ.
MarketWatch is doing what several forex brokers are now doing: using signals taken from culling social media to help provide direction and trading signals for traders.
The use of social media, and indeed media in general, is of growing interest to many companies in the financial sector, and traders alike. With interactive video channels such as YouTube, the second most searched entity on the internet worldwide, taking the place of more traditional methods of providing information, MarketWatch is most certainly making steps toward ensuring that its service is in keeping with today’s audiences.
Twitter, which became a public company last year subject to an extremely high-value initial public offering which led to a number of grey market trading in shares among some of Britain’s mainstream electronic trading firms such as ETX Capital and IG Group, has demonstrated that the borderless nature of social media as a method of conveying vital information to a worldwide audience has benefit for large corporations as well as private individuals.
In this particular case, Market IQwhich provides sentiment and velocity metrics as well as collates investment ideas from 2,200 sell-side brokers to enhance investment workflow, may realize that positioning market-related data via Twitter is effectively the marriage of two borderless industries – social media and electronic trading.
The Wall Street Journal’s MarketWatch portal is not the only site to realize the dynamic which news feeds are taking, as just last month LeapRate reported that sentiment analysis signals are becoming increasingly available via social media.
Bloomberg was the subject of that particular report, as a result of its launch of Bloomberg Social Velocity, which polls Twitter and StockTwits for the cash hashtag which often precedes news relating to stocks.
Prior to that, Reuters incorporated its existing Twitter sentiment analysis tool into Eikon, the firm’s institutional messaging system, within its desktop and mobile environments.
The real-time nature of FX trading is a potential benefactor of such instantaneous information, and with speed of execution now extremely efficient due to numerous attempts by technology companies to eradicate latency, the availability of news and analysis by social media is another potential means of high volume generation.