Social media websites like Twitter and Facebook have become increasingly important to high frequency traders looking to anticipate market moves before they happen, but could they eventually become as significant as traditional business news providers in the world of high frequency trading?
As CNBC‘s Antonya Allen reports, major news and financial information providers such as Bloomberg, Dow Jones and Thomson Reuters already offer services that filter market news from company websites and social networking websites, but experts gave mixed views on whether social networking sites would be seriously used to influence portfolio positioning.
Edgar Perez, author of The Speed Traders: An Insider’s Look at the New High-Frequency Trading Phenomenon That Is Transforming the Investing World, said he has not come across a trader who had made money from information supplied on social networking sites.
“I would be very interested in seeing cases where people actually made money using information from Twitter. Remember there’s a lag there of time and with high frequency trading you want to make sure you connect directly and don’t have any third party providers for information,” Perez explained.