Social Media part 2


Many FX retail traders were closed out by the fake tweet that purported to come from AP. The chart below from LeapRate shows the market impact on the Dow.

DJIAAccording to LeapRate “CFDs on the main global equity indices are the most popular products traded at retail FX brokerages, after the main FX pairs, and Gold and Oil. And on a day like Tuesday, when the equity markets had been heading up steadily, many retail FX traders joined the “momentum trade” and opened long-Dow and long-S&P positions, only to be closed out during the tweet-induced flash-crash.” More information at LeapRate here.

Welcome to the real-time impact of social media!

One Response

  1. Is it just me, or do other people wonder if anyone who makes trading decisions based on unsubstantiated Twitter feeds kind of gets what they deserve? I saw a funny comment on John Lothian’s newsletter today about this. “I get a chuckle seeing people mine the same sentiment ore from the same quarry with a different shovel, and then get puzzled why they got the same weird metal as all the other times.”

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