The number-crunchers on Wall Street are starting to crunch something else: the news.
Math-loving traders are using computers to speed-read news reports, editorials, company Web sites, blog posts and even Twitter messages — and then letting the machines decide what it all means for the markets. The development goes far beyond standard digital fare like most-read and e-mailed lists. In some cases, the computers are actually parsing writers’ words, sentence structure, even the odd emoticon. A wink and a smile — ;) — for instance, just might mean things are looking up for the markets. Then, often without human intervention, the programmes are interpreting that news and trading on it.
Bloomberg monitors news articles and Twitter feeds and alerts its customers if a lot of people are suddenly sending Twitter messages about, say, IBM.
Lexalytics, a text analysis company in US, that works with Thomson Reuters, says it has developed algorithms that make sense out of Twitter messages. That includes emoticons like the happy-face :) and the not-so-happy :.