Early adopters of Twitter started using the micro blogging tool to track trade sensitive information. Industry professionals say that the use of Twitter is growing rapidly throughout financial markets, and being used by traders as a platform for active exchange of information, which used to take place on the trading floor.
Twitter has changed the way that many traders look at information now – the most appealing is the real time aspect of getting the valuable information. The 140 character limit is perfectly suited for a fast-paced trading environment.
A team of economists in Munich, Germany have developed http://tweettrader.net/, a Website that can predict individual stock trends and certain patterns using information from Twitter. They analyzed 250, 000 tweets that were sent over a certain period of time and discovered coordination in what Twitter producing against what other analyst and investors were saying. They found that if you follow stock market tweets, you can achieve an average of 15% rate of return. Share prices reflected analyst and investors opinions in regards to positive or negative developments.
Thousands of market-related messages are being transmitted via Twitter every day, making it a valuable tool for information exchange. If users tweet good stock tips more often, they will have more followers and their tweets will be retweeted more often. Tweets with more valuable recommendations will receive greater consideration in overall analysis.