Trading Financial markets : Trading Trumps tweets

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Fri Jan 13, 2017 11:22 am ... 1?mod=e2tw

At Mizuho Financial Group Inc. in New York, foreign-exchange trader Daniel Riveira said last year he began discussing with co-workers plans to get the Japanese financial firm to lift its longtime ban on Twitter after Mr. Trump’s threats to revise trade policies with Mexico prompted a sharp decline in the peso.

This month, Mizuho granted read-only access for its U.S. banking staff, according to a spokesman. The firm said it lifted the ban to give traders greater access to market-moving information, not just to Trump’s tweets.

“We never thought we needed it before,” said Mr. Riveira, who is a managing director at Mizuho. Now, “the people who have Twitter are going to have an advantage over those who don’t.”

While many large trading firms increasingly depend on electronic algorithms that can be programmed to buy or sell an instant after an economic-data release or corporate-earnings report, the unscripted nature of Mr. Trump’s tweets poses a challenge.

High-speed trading strategies can quickly identify that a stock was referenced in a tweet. But discerning whether the underlying message is bullish, bearish or indifferent presents a significant programming challenge.

“You have an issue of interpreting through language, that’s the first problem,” said Blair Hull, a pioneer of electronic-trading strategies and founder of Ketchum Trading LLC and Hull Investments LLC. “Experts in linguistics have been working on this for years and still don’t get it right.”

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