Tracking tweets proves profitable for Derwent Capital

The London-based hedge fund, Derwent Capital, finished with a 1.85% return after incorporating a new trade strategy using data from Twitter to track the market mood and this way better predict the changes and ebbs of the stock exchange. Many are surprised that this extremely innovative strategy has worked. However, the strategy is "based on research published by the University of Manchester and Indiana University in October which demonstrated that the number of emotional words on Twitter could be used to predict daily moves in the Dow Jones Industrial Average."

The founder of Derwent Capital, Paul Hawtin, said he was “very confident” about the strategy, stating, “We watch to see how each of the different mood states changes in real time. The biggest sentiment change is reflected in the market around two to four days later.”