Data has been part and parcel of our life and it will be used increasingly to drive more decisions in the future. According to a Seagate study, the amount of data in 5 years’ time will be 5 times more than it was since 2018!
So, in this article, we will share how you can use data as signals into reading stock performance. We will be sharing how tweets from Donald Trump (in text form) can be used as a form of data to generate certain trade ideas and signals.
With reference to the image (Figure 1) below, we can see how Donald Trump’s tweets affected the market to a certain extend. We will be sharing a few steps that can be taken to understand how Trump’s tweets can be used as powerful trading insight and how to act accordingly to maximise your profit.
How To Analyse the Data
So here is the step-by-step how you can analyse the Tweet data to your advantage:
STEP
#1
Collect Tweets from Donald Trump
A starting point will be to either manually or to develop an automated program to compile all of Donald Trump’s tweets on Twitter.
STEP
#2
Filter Tweets that related to Financial Markets
A discretionary view can be taken to filter and distil Donald Trump’s tweets into market moving, financial markets related tweets. This can be done either manually (a lot of work) or with an automated system (word search) to do the heavy lifting work for you.
STEP
#3
Assign positive and negative categories to Donald Trump’s financial related Tweets
Even harder to implement in an automated process, that can assign positive and negative categories to Donald Trump’s tweets. An automated process is likely required to leverage on AI related solutions to tease emotive tones out of pure text. Of course this is a relatively simple task for humans!
STEP
#4
Observing ‘Patterns’ and develop trading strategies
With reference to the image above (Figure 1), we can see that there are certain ‘patterns’ that can be established before developing a trading strategy. For example, whenever negative to low occurrence positive tweets are identified, these are actually excellent entry signals to long the Dow 30. High counts of positive tweets, with evidence of peak followed by a declining trend are excellent take profit/exit signals.
To sum it up, Donald Trump’s presence has without a doubt impacted the US stock market. We are writing this article so our readers can benefit by studying his Tweets as it is a great addition to have in understanding the current flow of the US stock market.
