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Desperate HFT Algos To Scour Twitter For Momo Feedback

Tyler Durden's picture




 

In yet another example of just what a farce our market has become, it appears that HFT algos, no longer able to freely frontrun the market courtesy of counter HFT-measures offered by major banks and an SEC which has started sniffing around illegal HFT activity, have stooped to the second-lowest rung in the ladder: scouring through momo trader tweets on Twitter, particularly those from the StockTwits network and somehow converting that into actionable "intelligence." Because while until now some amusing attempts at money management using the garbled noise of Twitter had been implemented, all of them relied on human eyes to translate content, going forward it will be robots doing the actual analysis, not to mention sarcasm translation. STM reports: "A Boulder, Colo., collector and redistributor of comment expressed on social media networks Thursday will launch a pair of streams of data from Twitter and the securities discussion site StockTwits that are 'normalized' and ready to be fed to computers for analytical processing. Gnip said it has prepared the streams as part of the launch of a product it calls MarketStream, that is designed for use by hedge funds and high-frequency traders. The move follows the launch in May of a social-media-based hedge fund in London. In that launch, Derwent Capital Markets said the fund it created would try to achieve consistent above-market returns from real-time analysis of comments on social data." Well actually if they really want above market returns they should also add Yahoo Finance message boads to StockTwits: that will really put the bind on Steve Cohen to come up with new and improved ways to generate information arbitrage. At that point the entire momo crowd in the whole world will be swaying the market like an explosive-laden boat full of news reactive lemmings, who believe they move the market, only to receive terminal margin calls within days. But, yes, the safety of the crowd is soooo nice.... Until it isn't. As for the algos, we can bet what side of the trade they will be vis-a-vis the prudent investor subsegment that chases market heatmaps in a market in which VIX 30 is the new normal.

More on this latest attempt by vacuum tubes to scrape the proverbial bottom of the barrel:

In the Gnip case, the streams of tweets have been turned into data in a uniform or 'normalized' format that hedge funds or firms of any type that rely on automated processes for making high-speed trading decisions. And those streams are intended for use along with other statistical and news-based sources of market data.

 

The launch Thursday is being made in conjunction with StockTwits, a Web site and service whose users comment solely on capital markets events and individual stocks.

 

Initially, MarketStream will actually provide two streams of normalized data: One that relays comment from Twitter, the progenitor of the concept of a single user broadcasting 140-character messages to the web at large, and StockTwits, which created the $(TICKER SYMBOL) tag that lets tweeters identify exactly which stock a message is talking about. Such tags allow users and computing systems to quickly pick up content relevant to a single stock such as KO (Coca Cola Company).

And the punchline:

The combination of the "broad" feed from Twitter and "specific" feed from StockTwits will translate the "voice of the market,'' in McGuire's term, into "workable data" for algorithmically-driven trading systems.

Well, as long as it does not translate into a "picture of the market."

Nor, of course, of the abovementioned companies IPO chances...

 

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Thu, 11/17/2011 - 12:28 | 1887157 gojam
gojam's picture
  • Get ready for Twitter flash crashes. The final tweet from the canary in the coal mine.
Thu, 11/17/2011 - 12:44 | 1887243 NewThor
NewThor's picture

#BITCHEZ

Thu, 11/17/2011 - 13:02 | 1887355 Canucklehead
Canucklehead's picture

How would you normalize the word BITCHEZ or FUCK?

Thu, 11/17/2011 - 13:03 | 1887357 Hansel
Hansel's picture

@zerohedge will control the algo-bots!  All hail our new @zerohedge overlord!

Thu, 11/17/2011 - 12:27 | 1887159 aldousd
aldousd's picture

this would be vulnerable to "Twitter bombs" just like Santorum was to Google bombs.  

Thu, 11/17/2011 - 12:57 | 1887320 Nascent_Variable
Nascent_Variable's picture

All I want for Christmas is to watch the entire US stock market crash into oblivion because of trolls on Twitter.

Thu, 11/17/2011 - 13:12 | 1887397 fonestar
fonestar's picture

Twitter Bombs!

 

"OMG, Bove said to sell everything!  The sky is falling!"

Thu, 11/17/2011 - 17:11 | 1889014 TheFourthStooge-ing
TheFourthStooge-ing's picture

A Magic 8-Ball would be at least as accurate as this system, with the advantage of not being vulnerable to a denial of service attack.

 

Thu, 11/17/2011 - 12:28 | 1887161 homersimpson
homersimpson's picture

Quick! Set up 100 twitter accounts and type "$FAZ and GOLD has lots of upside" on all 100 twitter accounts..

Thu, 11/17/2011 - 12:30 | 1887181 101 years and c...
101 years and counting's picture

since you're not pre-approved for lying (like fatty liesman), the sec will have you arrested.

Thu, 11/17/2011 - 12:55 | 1887307 PunkSgt
PunkSgt's picture

I have 20  robotic twitters already jamming muther fucker!!! You don't even have to lie, you just have to jam it. The machince won't know the difference between buy, sell, hold. LOLs 

Thu, 11/17/2011 - 12:55 | 1887308 PunkSgt
PunkSgt's picture

I have 20  robotic twitters already jamming muther fucker!!! You don't even have to lie, you just have to jam it. The machince won't know the difference between buy, sell, hold. LOLs 

Thu, 11/17/2011 - 12:58 | 1887327 fizz
fizz's picture

The thing is, these HFT's will 100% be fading any trends on Twitter. Making people capitulate is more profitable than following their lead.

Thu, 11/17/2011 - 12:28 | 1887163 dracos_ghost
dracos_ghost's picture

#Occupy Twitter Next?

We should all just start tweeting ridiculous headlines into this tweet and have the algos go schizo.

Thu, 11/17/2011 - 12:30 | 1887179 CPL
CPL's picture

Yup.

Thu, 11/17/2011 - 12:29 | 1887169 JSD
JSD's picture

But it's Friday...give it a break!

Thu, 11/17/2011 - 12:29 | 1887175 GeneMarchbanks
GeneMarchbanks's picture

Who-said-what-markets

Thu, 11/17/2011 - 12:30 | 1887177 OS2010
OS2010's picture

Stock-"twits" -  loooove it!

Thu, 11/17/2011 - 12:37 | 1887219 NotApplicable
NotApplicable's picture

From the "You Just Can't Make This Shit Up" category...

So, which will happen first, an Ashton Flash Crash, or a Kardashian one?

Thu, 11/17/2011 - 12:30 | 1887180 Beatscape
Beatscape's picture

Fasinating... I can't image that they could classify momo stock Tweets as true intelligence.  It would be too easy to code up a Twitter bot that would generate all kinds of false messages to trip up your competition.  Trick them into taking a position based on seemingly legitimate stock Tweets, take the other side of the trade and wait for them to realize their folly and bail out and then close the trade.

Thu, 11/17/2011 - 12:45 | 1887251 NewThor
NewThor's picture

Legitimate stock tweets? HA HA HA HA HA HA HA HA HA HA 

Thu, 11/17/2011 - 13:45 | 1887586 viahj
viahj's picture

Illogical

Thu, 11/17/2011 - 12:30 | 1887182 Hephasteus
Hephasteus's picture

Weird how sociopaths try to find some way to use social networks in their pathology. It's all so logical at this point.

Thu, 11/17/2011 - 12:32 | 1887185 DormRoom
DormRoom's picture

Another reason why you should fear the google-facebook complex.  Both companies have instiutionalized surveilllance. Worse, they have turned surveillance into a multi-billion dollar market. And its outgrowth will lead to a new police state apparatus.

 

We are all fouccaultD now.

Thu, 11/17/2011 - 12:33 | 1887190 Hephasteus
Hephasteus's picture

I'm long bluetooth douches. It's a web site. Check it out.

Thu, 11/17/2011 - 15:52 | 1888353 GolfHatesMe
GolfHatesMe's picture

I call them Douchetooths

Thu, 11/17/2011 - 12:33 | 1887186 alien-IQ
alien-IQ's picture

the comedic potential of this information is...INFINITE!

Thu, 11/17/2011 - 12:32 | 1887187 Ivanovich
Ivanovich's picture

Kill the bots.  Kill them all.

Thu, 11/17/2011 - 12:46 | 1887262 NewThor
NewThor's picture

#SKYNET #KILL #YOU #DRONE #ARMY #UNSTOPPABLE #PUNY #HUMANS

Thu, 11/17/2011 - 12:32 | 1887188 RobotTrader
RobotTrader's picture

Don't forget Investor's Business Daily's website

I bet tons of CANSLIM junkies are furiously scanning the Top 50

Looking for buys today based on "proper bases", yada, yada, yada

http://clearstation.etrade.com/cgi-bin/bbs?post_id=9900313

 

Thu, 11/17/2011 - 12:39 | 1887228 lieutenantjohnchard
lieutenantjohnchard's picture

robottrader: when a permabull turns cynic after repeated losses.

Thu, 11/17/2011 - 12:35 | 1887197 Manthong
Manthong's picture

Maybe they could start a series of rumors from S.E.T.I. and juice the markets with hopes that Vulcans are on the way with limitless dilithium crystals.

They could get weeks out of the on and off efforts of Ambassador Soval to convince the Vulcanstag to go along with sharing the technology that solves all of our problems.

Thu, 11/17/2011 - 12:48 | 1887269 dwdollar
dwdollar's picture

Liesman and Cramer should demand the Vulcans take more action to save Earth.

Thu, 11/17/2011 - 12:34 | 1887199 Matt1973
Matt1973's picture

What happens if we all go on Twitter and post how great AAPL is....will it go up?

Thu, 11/17/2011 - 12:35 | 1887207 Roland99
Roland99's picture

They're just going to follow Robo's feed.  I mean, after all, who knows better??

 

Thu, 11/17/2011 - 12:35 | 1887206 LeBalance
LeBalance's picture

dangerous children need to be put someplace where they can not hurt others.

Thu, 11/17/2011 - 12:48 | 1887273 ReallySparky
ReallySparky's picture

You owe me a keyboard.

Thu, 11/17/2011 - 12:36 | 1887210 hondamikesd
hondamikesd's picture

O/T, but I think ZH'ers will appreciate it. Why Gold? From a chemistry point of view: http://www.slatev.com/video/why-gold-why-not-argon/

Thu, 11/17/2011 - 12:37 | 1887216 TooRichtoCare
TooRichtoCare's picture

Great...so all these morons who post all kinds of sensationalist pumping headlines, or bashing headlines, on Yahoo message forums will now go into overdrive.  

The Paid Bashers. People who get paid based on the number of bashing posts they post, under multiple aliases....they have fake conversations going on between various people who are all actually the same one guy, and they give themselves fake "5 star" ratings and bombard anyone who argues against them with "1 star" ratings....

Thu, 11/17/2011 - 12:37 | 1887220 The Deleuzian
The Deleuzian's picture

I'm surprised it took the robots this long...

Thu, 11/17/2011 - 12:37 | 1887222 Hugh_Jorgan
Hugh_Jorgan's picture

I find it amazing how little the architects of this brilliant concoction understand the fundamentals of moral hazard. Yeah, there is no way to subvert an uncontrolled, unregulated market data to fleece the unwashed masses. I would hope for a short life for this crap, but I know what follows will be even more half-baked.

Thu, 11/17/2011 - 12:44 | 1887223 slewie the pi-rat
slewie the pi-rat's picture

this is grrrrreat!

why be so negative abt the styooopid hiFreeks trying to front-run the tweets?  all's fair in intel, altho i agree this is right up there with dumpster diving and going thru sacks of last week's garbage

maybe they can develop a little robot spyware to help them;  tell them when someone is preparing to twitter

Thu, 11/17/2011 - 12:38 | 1887224 jiggerjuice
jiggerjuice's picture

OT

Everyone should Tweet that Effen is going the fuck down. Sick of these "mouse rollover" ads popping up all over my face. I move my mouse up to the address bar quite frequently, meaning im getting Effed in the eye at least once every five minutes.

Waiting for HFT to get plugged into ZH by accident. SP 666 in 5, 4, 3, 2...

Thu, 11/17/2011 - 12:41 | 1887236 NotApplicable
NotApplicable's picture

NoScript is your friend.

http://noscript.net/

Thu, 11/17/2011 - 12:57 | 1887323 Hephasteus
Hephasteus's picture

No it's not. You can use it but you must use it in conjunction with peer guardian. Else it just collects the information and phones it home to it's website.

Thu, 11/17/2011 - 18:48 | 1889435 StychoKiller
StychoKiller's picture

Go here:

http://www.mvps.org/winhelp2002/hosts2.ht

Install the file(s) according to directions, your browser won't even load most ad sites.

Thu, 11/17/2011 - 12:39 | 1887226 Texas Ginslinger
Texas Ginslinger's picture

How can we steer the HFT crowd toward Tilson's tweets..............???

Thu, 11/17/2011 - 12:39 | 1887227 firstdivision
firstdivision's picture

LOL at the attempt to create a short squeeze.  Too bad for the bulls, there's not too many shorts to close. 

Thu, 11/17/2011 - 12:39 | 1887229 Byte Me
Byte Me's picture

Brilliant!!!

HFT's trade on noise now already. Can't wait for the flash ramp/crashes. Must remember to twat that I've sold 10mil AAPL.

Thu, 11/17/2011 - 12:39 | 1887231 NotApplicable
NotApplicable's picture

I'm eagerly awaiting their consumption of ZH threads.

*rubs hands while cackling madly*

Thu, 11/17/2011 - 12:40 | 1887233 dwdollar
dwdollar's picture

Angie's List... LOL... Does that garbage even pretend to be profitable???

Thu, 11/17/2011 - 12:41 | 1887239 docj
docj's picture

Anyone who has to work and/or make rent in this market has my deepest sympathies.

Anyone still "playing" in this market richly deserves the royal screwing they're certainly going to get.

Thu, 11/17/2011 - 12:42 | 1887240 css1971
css1971's picture

Mmmmm, pump and dump heaven.

Thu, 11/17/2011 - 12:45 | 1887254 the grateful un...
the grateful unemployed's picture

okay so pretty soon the EVIL hedge fund starts generating thousands of false messages with the word BUY APPLE. the machine reads this, the GOOD hedge fund buys APPLE and the EVIL hedge fund sells into the rally, but wait, then as the market starts to go down, the PPT puts a bid under the futures, and since APPLE is indexed it goes up too, and wait, the guys who bought APPLE as part of an elaborate ruse get rich anyway. then the EVIL hedge fund goes short and puts out a million messages that say SELL APPLE, and the PPT calls up the GOOD hedge fund and together they squeezes the shorts at the EVIL hedge fund like a giant pimple. moral of the story you can't buy the DIP unless there is a DIP in the first place. second moral of the story, don't be the guy who creates the dip in the first place

Thu, 11/17/2011 - 12:46 | 1887258 adr
adr's picture

So this will kind of be like how a stock can jump 20% in a few minutes when 1000 law firms release statements that they are looking into company finances on allegations of fraud. I see it all the time when I look at the highest percentage daily movers. There isn't any good news, just reports that generate lots of headlines. Momo trading Algos see the same company mentioned 100 times in a few minutes and think they need to buy the stock. My guess it is a programmed golden parachute so insiders get to sell off the last bit of stock at inflated prices before a comapny goes down.

Thu, 11/17/2011 - 12:46 | 1887259 Your Creator
Your Creator's picture

Checkmate said the canary in the goldmine.

Thu, 11/17/2011 - 12:49 | 1887281 ZeroPoint
ZeroPoint's picture

Wow. Has the steady stream of insider information dried up?

 

Occupy Wall Street should immediately flood this thing with #"BANK OF AMERICA STOCK IS SHIIIIIIIIIIT!!!!!"

 

 

Thu, 11/17/2011 - 12:49 | 1887283 Dr. Gonzo
Dr. Gonzo's picture

Shoe Shine Boy Algorithm. I heard it was still in developement. This must be the first prototype.

Thu, 11/17/2011 - 12:56 | 1887291 WTF_247
WTF_247's picture

These bots never give up with the stupidity.

 

For around $100.00 anyone can purchase over 1000 valid Twitter accounts that are verified and ready to go.  Add a bit more and they will include followers.  To really do it right you probably need several thousand.  As of August 2011, they had about 100,000 registered users - http://blogs.investors.com/click/index.php/home/60-tech/2539-stock-market-volatility-not-hurting-stocktwits.  I would guess on any given day not more than 20% of the registered users are active.

It would not be hard to then register all these accounts with Stock Twits and then just create a  program to flood it with random trade information through proxies from all over the world.  All you have to do is have it scrub the real time stream and then model the junk posts exactly after the real posts so that the textual context is correct, you just change the symbol and action to something else.  It would not be hard to have leaders and followers created (of trades and streams), and to have it converse with itself to appear normal.

Because you know 100% that the programs scrubbing twits is looking to fade the dumb retail market, it would be easy to generate information to mislead them and in the end make money off of their stupidity.  I highly doubt I am the only one that would think to do this based of the bots moving in to an area where they should stay out.

The bots entering into stocktwits will ruin what many users enjoy using on a daily basis.

Thu, 11/17/2011 - 12:55 | 1887304 Apocalicious
Apocalicious's picture

The quants actually have been doing this with internet message boards for years.

I know an ex DE Shaw guy who used this:

http://strategy.sauder.ubc.ca/antweiler/public/returns.pdf

And I know some ex MS Search programmers who did basically the same thing. Like everything else, it worked for awhile. Twitter seems like the next logical extension of the premise.

 

Thu, 11/17/2011 - 12:56 | 1887312 Instant Wealth
Instant Wealth's picture

So, let's disturb them a little bit:

 

I am gonna buy some GRPN stocks today. They look real cheap.

I am gonna buy some GRPN stocks today. They look real cheap.

I am gonna buy some GRPN stocks today. They look real cheap.

I am gonna buy some NFLX stocks today. They look real cheap.

I am gonna buy some NFLX stocks today. They look real cheap.

I am gonna buy some NFLX stocks today. They look real cheap.

I am gonna buy some LULU stocks today. They look real cheap.

I am gonna buy some LULU stocks today. They look real cheap.

I am gonna buy some LULU stocks today. They look real cheap.

I am gonna buy some LNKD stocks today. They look real cheap.

I am gonna buy some LNKD stocks today. They look real cheap.

I am gonna buy some LNKD stocks today. They look real cheap.

I am gonna buy some FSLR stocks today. They look real cheap.

I am gonna buy some FSLR stocks today. They look real cheap.

I am gonna buy some FSLR stocks today. They look real cheap.

 

 

Thu, 11/17/2011 - 13:51 | 1887647 viahj
viahj's picture

Robot Trader just blew a circuit

Thu, 11/17/2011 - 13:01 | 1887342 CapitalistRock
CapitalistRock's picture

Nothing new here. For more than 10 years people have been writing software that takes the text from discussions on the Internet and uses algorithms to make trades. Most are not making money. A few attempts might be. The Boulder, CO company that is assisting in compiling the data is a far better bet.

To each his own. This is simply the free market at work.

Thu, 11/17/2011 - 13:01 | 1887344 sabra1
sabra1's picture

must be a hacker somewhere who can inbed a virus into a headline? just like in the movie, "Independence Day!" give those bots a cold!!!

Thu, 11/17/2011 - 13:04 | 1887350 JenkinsLane
JenkinsLane's picture

I suggest a mass tweet of "How about a nice game of chess? #Dow #S&P 500", etc., etc.

Thu, 11/17/2011 - 13:03 | 1887356 lizzy36
lizzy36's picture

BUY $JEF

BUY $JEF

BUY $GM

BUY $GM

BUY $GM

SHORT HOWARD LINZDON

Thu, 11/17/2011 - 13:03 | 1887359 MrBinkeyWhat
MrBinkeyWhat's picture

Today's take home word: Desparate

Thu, 11/17/2011 - 13:07 | 1887376 johnQpublic
johnQpublic's picture

is that a misspelling of disparate or desperate?

Thu, 11/17/2011 - 13:11 | 1887392 PunkSgt
PunkSgt's picture

Oh look I just jammed 5 stocks with this one little tweet. 

Bank of America new commercial, thanking customers during this difficult time.  http://goo.gl/BvrFt #funny #banks #ows $bac $gs $ms $wfc $jpm #occupy 

Thu, 11/17/2011 - 13:18 | 1887427 rosiescenario
rosiescenario's picture

Hard to comment on this insanity...it would appear that if real, excuse me, fiat money is being gambled in this fashion we are drawing near to The Rapture....

Thu, 11/17/2011 - 13:27 | 1887456 MarcusLCrassus
MarcusLCrassus's picture

It sounds as though you could really wreck havoc on these scumbags if you use one of those high frequency posting software programs.  You could tell your program to, for example, automatically post tons of bad things about, say, Coca Cola on tons of message boards and twitters all over the internet.  The HFT programs would pick this up and act accordingly.  If you had shorted Coke in advance you would be golden.  Rinse and repeat. 

 

Someone out there has to already be doing this. 

 

Thu, 11/17/2011 - 13:27 | 1887458 NEOSERF
NEOSERF's picture

Seems like it should be illegal but this is where I expected things to get to...in the last 20 years as media has gone from taking days or weeks to hear about changes and news, to a couple of days, to a day to hours on MW we now have someone trying to look at seconds on Twitter...question is whether they are using the data to start a trend vs. jumping on one sooner than others...identifying a swing in sentiment and jumping on the bandwagon is different than using algorithms to stuff a trend forward...seems like this is going to be pretty dangerous stuff for the hedgies as my minute to minute sentiment is like new england weather

Thu, 11/17/2011 - 13:29 | 1887464 TooRichtoCare
TooRichtoCare's picture

Maybe these algos could be put to more productive use....like maybe in noticing internet chatter containing critical words like "airplane" "World Trade Center" and "can't wait to get me some virgin muff"....

Thu, 11/17/2011 - 14:48 | 1887938 flattrader
flattrader's picture

They do.  I think it is still called Echelon.

Thu, 11/17/2011 - 13:59 | 1887679 El Viejo
El Viejo's picture

Where's the Rodent Freicorps when you need him. Maybe this will make up for my taste in Nutria (the other white meat) sausage:

http://www.animalliberationfront.com/News/2006_08/LemmingMyth.htm

 

Thu, 11/17/2011 - 17:03 | 1888963 Peter_Griffin
Peter_Griffin's picture

Why do HFTs need to look at news when they can just look at buy/sell orders coming in?  They see the market in the future.

Thu, 11/17/2011 - 21:17 | 1889872 Killuminati
Killuminati's picture

zerohedge gotta admit dude some twitter data is good. like when doug kass tweets market is strong and bullish then not long later it crashes... cant beat that kind of data

Sat, 11/19/2011 - 02:36 | 1893635 ArsoN
ArsoN's picture

Mom? ...Dad?

Sun, 01/01/2012 - 22:34 | 2025699 Yen Cross
Yen Cross's picture

 Happy [ New ...ing] year!   Slewie called that " front  rubb-a-dubb"!    Nice work Slewie!

 

 On a lighter note. ( Intervention is the Mantra? )   Let's trade/ ya boners!<>...

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