Wall Street firms use algorithms that capture Trump’s tweets to profit from automated trades

February 2, 2017 | Rocco Savage

Automated trading is once again flexing it’s muscle by showing the possibilities when having access to the right data.

The jaw-dropping speed at which certain stocks have moved in response to Donald Trump’s tweets about corporate America makes it seem as if Wall Street already was waiting for the president-elect’s words.

It was.

Some sophisticated traders with automated programs are using computer algorithms that instantly capture Trump’s Twitter remarks then immediately buy or sell the affected stocks, analysts said.

“It’s in the algorithms. They’ve done it,” said Joe Gits, chief executive of Social Market Analytics.

Gits’ firm isn’t among those traders, he said. Instead, the company culls the 500 million tweets issued daily on Twitter to find comments from influential people such as Trump that could affect stocks and then immediately relays that “sentiment” data to traders.

Wall Street is tight-lipped about which firms use the automatic trading programs in their bid to profit from Trump’s tweets, and it’s unclear how much of the stocks’ trading volume reflects the automated trades.

Representatives from venerable investment firms such as Goldman Sachs Group, Morgan Stanley and Bank of America’s Merrill Lynch all declined to comment.

So did Citadel Securities, a well-known automated trading firm that also operates a hedge fund. Gits likewise said he was not at liberty to disclose the names of traders using such automated programs.

The secrecy isn’t surprising because firms employing the programs, which try to profit from even modest point spreads on high-volume trades, don’t want to reveal their advantage, said Josh Brown, chief executive of Ritholtz Wealth Management who also runs the Reformed Broker website.

“Nobody would share this publicly,” Brown said. “Who would say, ‘Yeah, this is how we’re doing this, and it’s working great?’ But it’s obvious that’s not human traders.”

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