As traders grapple with how to use Twitter in their trading day, Alpha Eagle has debuted a social media application that collates to the top tweets aimed at traders on the sellside and buyside. Called Social Sonar, the app resembles the popular Tweetdeck program that displays multiple tweets from various sources. Social Sonar gathers and displays the read-only tweets from a potential list of nearly 10,000 CEOs, lawmakers, senior executives and analysts.
It’s not a Twitter sentiment tool like those that became popular three years ago when a few hedge funds announced plans to incorporate tweets into their trading models. Many of these funds have since failed.
Instead, says Ealge Alpha CEO and founder Emmett Kilduff, Social Sonar looks for information that is interesting in the stock market sector, whether its about the US Fed, Apple or Syria, he said.
“I don’t think there is much correlation between sentiment and share price. We are looking for interesting tweets that will add information and color on certain stocks and macro topics,” he told Traders Magazine.
Social Sonar is being used by an assortment of trading firms including Morgan Stanley in London (Kilduff is a former trader at Morgan Stanley) and the firm lists Tradition as a client.
“We’re looking for tweets by board members, CEOs, COOs, CMOs of major companies that a stock trader or analyst might need,” says Kilduff. What the trader does with the information is up to them and their trading strategy. “We are a data and information provider. Traders can use this information to plug it into their trading tools and models if they desire,” he said.
Kilduff said that Social Sonar aims to reduce the clutter of noise that often overwhelms Twitter. Pointing to the erroneous tweet about a bombing at the White House from a highjacked Associated Press Twitter account this summer, Social Sonar can detect bogus tweets in the future. Along with looking for tweets that look to corroborate the initial tweet Social Sonor also looks at the language of the Twitter post in question.
“If the electronic Syrian Army had the A.P. style book, they would have known that the word “Breaking” in their tweet would be in all caps and Barack Obama would be referred to as “President Obama” and the White House would be called “White House” and not “the White House,”” he told Traders Magazine.
As the firm’s entry level product, Social Sonar is available in the U.S. and the U.K. because, according to Kilduff, these are the top markets for Twitter in the financial markets. The Twitter-based service is read-only and it fits inside firm’s compliance initiatives with, as the company claims, “clear records and audit trails to meet all compliance requirements.”
Eagle Alpha has finally brought twitter to the Square Mile. The features, which include smart keyword searches and email alerts, allow me to access market relevant tweets that I would never have found by searching through bog standard twitter channels, Mike Reuter, senior broker for Tradition, a sellside firm based in the City of London, said in a press statement. He is also a beta-tester of the software.
James MacLachlan, a senior trader for CF Global, said in a press statement: From game-changing CEO opinions to instant reaction around key financial news and company reporting, Social Sonar is an essential addition to the run of the mill industry newswire services and gagged sell-side analysts.
Twitter is becoming more valuable over time,” said Kilduff, adding, “And there is a lot more content coming out on Twitter than ever before.”
