November 1, 2013

Social Sonar Reduces Twitter Noise for Traders

By

Phil Albinus

As traders grapple with how to use Twitter in their trading day, Eagle Alpha has debuted a social media application that collates the top tweets aimed at traders on the sellside and buyside. Called Social Sonar, the app resembles the popular TweetDeck program, which 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, said Eagle Alpha founder and CEO Emmett Kilduff, Social Sonar looks for information that is interesting in the stock market sector, whether it's about the U.S. Fed, Apple or Syria.

"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," Kilduff said. What a 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."

Kilduff said that Social Sonar aims to reduce the noise and clutter that often overwhelm Twitter-take, for example, the erroneous tweet about a bombing at the White House from a hijacked Associated Press Twitter account this summer. Social Sonar can help detect bogus tweets. Along with looking for other tweets that might corroborate the initial post, Social Sonar also looks at the language of the tweet in question.

Eagle Alpha's entry-level product, Social Sonar is available in the U.S. and the U.K.; according to Kilduff, these are the top markets for Twitter in the financial markets. The Twitter-based service is read-only and fits inside a firm's compliance initiatives with, as the company claims, "clear records and audit trails to meet all compliance requirements."

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