FROM THE BLOG

Using Twitter to Beat the FX Market ($GBPUSD example)

An interesting article from Bloomberg caught our eye today: How to Beat the FX Market? Just Get on Twitter, Academics Say. The story highlights a new study from the University of Virgina which suggests that traders need look no further than their twitter feeds to gain an edge in currency markets.

We are naturally a big fan of the Vox Populi phenomenon and to demonstrate the power of trading Forex using Knowsis alternative data (mined from social media), we constructed a simple low turnover GBP/USD strategy (going back to early 2012):

To construct the strategy, we simply:

  1. Created a 7 day simple moving average (SMA) from a daily sentiment score. The moving average excluded non-trading days.

  2. We then set up a weekly trading rule: BUY GBPUSD if the 7 day sentiment SMA is greater than the previous week value and vice versa.



And that was it…

Coming soon, we’ll be showcasing how you can use Knowsis alternative data to trade the Bond / Treasury market, Commodities (Gold and Oil) and Equity Index Futures.

In the meantime, if you would like more information about using Knowsis Alternative data, would like to use our live API feed or would like access to historical data for backtesting, don’t hesitate to get in touch.