UPDATED 17:10 EDT / APRIL 21 2015

NEWS

A super smart Twitter bot may be playing the stock market

red robot shadows m2m internet of things connected devicesMachines have been disrupting the job market for around 200 years, but until recently, those machines still needed a human operating the mill or driving the combine. But now the ongoing advancements in automation have led some analysts to say that we are living in the midst of a third industrial revolution, and the changes affect more than the manufacturing business.

According to a recent report by Slate, automation may be changing the way business is done on the stock market after a couple of high profit trades were made mere seconds after info on certain stocks hit the internet. And if robots buying shares seems funny, some stock traders aren’t laughing.

Both trades involved stock options being traded for million of dollars in profit based on information released on Twitter less than a minute before the trades occurred.

“It would be impossible for me to do,” a source who works as a stock options market maker told Slate. “By the time you could read the news, process it, and press the ‘buy everything’ button, it would take too long. The speed is unbelievable. They’re buying everything within like 3 seconds of it coming out, which is not possible for a human.”

There are already several services out there that analyze public data to predict the ever changing stock market. Dallas-based startup HedgeChatter, for example, gathers real-time data from social media and elsewhere to track stock sentiment, chat volume, market manipulation, and so on.

But services like HedgeChatter only give users data on what stocks may do. They do not make the purchasing decisions for them.

Stock trading bots are also nothing new, but the complexity involved in the recent options trades goes beyond the usual strategy of “buy X shares of Y company if condition Z is met.”

“It used to feel like a race that we could win or lose,” Slate’s source said. “But whatever algorithm they’ve developed, we are now completely helpless. Sitting ducks. This is by far the most advanced version of this we’ve ever seen. It’s at a totally different level.”

photo credit: littlelostrobot via photopin cc

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