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Oil Traders Misread Tweet, Oil Prices Spike
cartechboy writes "Ahh Twitter. Sometimes when you combine lightning fast information distribution and humans, minor (or not-so-minor) chaos can ensue. Yesterday, the Israeli military tweeted a commemoration of the 40th anniversary of the Yom Kippur war, which took place in 1973. But the tweet referenced the bombing of Syrian airports by Soviets, and oil traders, already an antsy group, assumed the tweet referred to an attack occurring that very moment. As you can imagine, this had some impact. Within an hour, the global price of oil jumped more than $1, from $110.40 to $111.50 as trading volumes soared. In the end, the traders missed a few things that would identify the tweet as historical vs imminent: Yom Kippur was weeks ago, the Soviet Union is no more, and most important, #checkthehashtag."
Anyone getting their investment advice from Twitter deserves what they get.
" the traders missed a few things "
Maybe it was intentional - I'm sure someone profited, after all.
Brian Hunter hadn't been born yet, and didn't know his history.
probably what happened is their algorithm (high frequency trading) read the tweet wrong and bought it without human oversight. a tweet like that would cause some ai to buy since war = higher oil cost.
"I just wish I could get in on more of these mis-pricings on time,"
That would make you a twitchy day-trader.
The real question is however how we, as a society, place so much power in the hands of stupid people. Politicians, obviously, are another case, but so are apparently nuclear commanders....
Most ACs are not even worth the keystrokes to insult them. Be generically insulted by this and ignored otherwise.
Not sure if it was clearly stated, but High Frequency Trading algorithms should take most of the blame. Computers ran by investment firms monitor social media and invest accordingly, so you don't have to actually watch the ticker with your finger on the button. Large funds you have (401k, IRA) are likely already doing this for you.
I am shocked, shocked!
I'm not sure it was computers. While it is conceivable that they have written a twitter bot that waits for news from Israel about conflicts in the Middle East, I'm not sure that the Israeli military Twitter feed would be a source of timely information in case of an actual attack.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
I do the "dollar cost average" thing, putting some money in every paycheck. I specifically don't read my account statements except once a year or so for this reason. The stock market always goes up in the long term. Even if it drops for a year it'll be fine. I won't be taking money out until I retire, and that won't be for at least another 25 years... it's best to not pay attention, in my opinion.
lightning: electrical discharges in the atmosphere.
lightening: what happens just before dawn.
Sacred cows make the best burgers.
"... the Soviet Union is no more .."
The tweet mentioned "Soviet Weapons" which are still around, not the "Soviet Union". Don't tweet words into their mouth.
I even bet oil traders have even looked at the entire #hashtag before screaming down the wire... #fearrules
They don't realize when something is ridiculous
And that is why having a worldwide integrated financial system mostly cobbled together with automated scripts is not always such a great idea.
-- Tigger warning: This post may contain tiggers! --
has become "someone tweeted wrong".
Laughter is the Spackle of the Soul.
>> Computers ran by investment firms monitor social media and invest accordingly
Yes, but they are no match for my random headline writing bots.
HFT doesn't take an hour to move 1%. I've worked in a financial firm, in the trading department. What takes an hour is for the head advisor to misunderstand something, make a (snap) decision, and pass it to the account managers, who count up how much of the investment to trade, and pass the numbers on to the trading desk, who calls in the trade, and it's done a few milliseconds later.
Seeing that much money move at once is what triggers the HFT algorithms, which will then buy and sell the commodity across different markets. The price will fluctuate a little as the HFT algorithms jump around waiting for the big rush of traders, but when it doesn't come, they move on elsewhere.
Without an actual war, it's unlikely very many investors would rush to buy oil, so the HFT algorithms would just increase the trade volume, but wouldn't move the price very much at all.
You do not have a moral or legal right to do absolutely anything you want.
Sure sounds hackable. Just a few bytes of information relayed through Twitter could make the instigator a lot of money from people who willingly sign their resources over to them.
"Prove all things; hold fast that which is good." [KJV: I Thessalonians 5:21]
what a massive "jump"!
I believe the actual term for someone who uses Twitter rumors for stock trading is "twit".
The stock market always goes up in the long term.
Oh yes.
Even if it drops for a year it'll be fine. I won't be taking money out until I retire, and that won't be for at least another 25 years... it's best to not pay attention, in my opinion.
That's a little simplistic. I know many folks who were just about wiped out, right around the time they retired. Yes, the market always goes up. And that is an awesome investment strategy if you are going to live for 200 years. For us mere mortals, where it's at when we retire - or move it into less volatile investments is much more important.
If you plan on moving your investments into something more conservative at some point, where is the market going to be at that point? I know one fellow who hung on a bit too long, and was bit hard twice.
I lucked out and went conservative pretty early on - way too early for most. I was an imbecile for about a decade. Sad to say, my smart colleagues who knew the market only went up in the long run are now planning on working into their 70's. Hopefully they will be allowed to do that. Me, I retired on my terms at 56.
Invest well, save well, live well, but well below what the economic forces tell you to.(real estate people, investment people, banking people) Pay attention to your stocks. Constant monitoring is only a problem if you get greedy, and too many people cannot not be greedy. The vampires and leeches feed on that greed, and do a slam bang job of extracting your wealth.
The shepherds did so well protecting the flock that the sheep no longer believed that wolves existed.
Bluto: "Did the Syrians give up when the Germans bombed the Bar Lev line? Hell no!"
"Forget it. He's rolling."
The stock market always goes up in the long term.
If you invested your money in stock markets a century ago, it would have been a relatively poor investment. The United States of America was the "winner" of the 20th century, both militarily and economically, so of course the American stock market was a very good investment. But without the benefit of hindsight, you would have had no reason to know that. A century ago the "hot" stock markets were Argentina and Russia, while the "safe" market was Germany. Well, $100 invested in 1913 Russia or Germany would be worth $0 today, and Argentina would not be much better. So which stock market is going to be the "winner" of the 21st century?
Putting money in every paycheck is great and exactly the way to go, but isn't "dollar cost averaging". Dollar cost averaging is something else and entirely bogus.
Suppose you get $120K. DCA advocates would tell you to invest, say, $10K of it every month into your preferred asset allocation, rather than investing it all at once.
On the other hand, suppose your cat walks over your keyboard while you're logged into your brokerage and sells $120K of stock. Do you invest it $10K at a time or do you just reverse your transaction immediately? Hopefully it is obvious that you do the latter -- but this scenario is exactly equivalent to the first one.
This is just terrible reporting. 1) No support is given to the claim that it was really the tweet that caused the "spike"*. 2) No account is given on how exactly the supposed misinterpretation came to be. Sorry Reuters, but writing that "traders did it" just isn't good enough. If this is a real "trading" story, there must be an official account of it happening somewhere (like an Exchange memo or something), and if there is, you should fucking dig for it and show us. *3) No context is given explaining why a mere 1% increase in price should even be called a "spike" in oil trading.
There's how smart investment day traders think they are and then there's how smart they really are.
I'm not sure where this came from. Speaking as an oil trader, the spike was entirely the result of Boehner's speech offering a temporary debt increase. I do have several twitter feeds open to guage news sentiment, but the IDF's isnt one of them. Did the Israelis find a ton of oil i was otherwise unaware of?
I believe the actual term for someone who uses Twitter rumors for stock trading is "twit".
I was thinking the term might be something more technical sounding, like "self-inflicted insolvency".
I see even classic Slashdot is now pretty much unusable on dial up anymore.
... I'm still shocked when anybody does anything based on something that happens on Twitter.
Not sure if it was clearly stated, but High Frequency Trading algorithms should take most of the blame. Computers ran by investment firms monitor social media and invest accordingly, so you don't have to actually watch the ticker with your finger on the button.
That's not HFT. For example, those groups could still do that even with five minute trading intervals as some have suggested here as a supposed "cure" for HFT. HFT would just mean that they could do it on the time scale of milliseconds.
And this is yet another good example of how fubarred the stockmarket is today. it's really time to reform the tradingmarket so stuff like this can't happen.. the whole financial crisis is more due to the media and it's reporting than on real financial information...
Not the 401k and IRA funds that I invest in. Mine are mostly either in smallcaps and index tracking stocks. They tend to buy and hold.
I used to be in the Futures market. Sure you could make a little bit more constantly buying and selling, but the transaction costs and hassle made it barely worthwhile. For a lot less stress and barely less money, you could just buy and hold and adjust your portfolio once every few months.
If you are not allowed to question your government then the government has answered your question.
the global price of oil jumped more than $1, from $110.40 to $111.50 as trading volumes soared
I'm pretty ignorant about the global oil market. Does 1% really qualify as a jump?
systemd is Roko's Basilisk.
Dow, adjusted for inflation.
If you'll look at the big chart at the link, you'll notice that the people who bought in at the height of the stock market in the 1920's didn't make their money back until 1960. And then actually went back into the red during the most recent crash.
You can argue if the DJIA is an accurate representation of market as a whole, or of the specific stocks in your portfolio. But you can't argue that even without factoring the capital gains tax, you're probably going to lose. With the capital gains tax, you can't win.
"If a nation expects to be ignorant and free in a state of civilization, it expects what never was and never will be."
"Adjusting for inflation", sure, but you have to compare that to my savings account adjusted for inflation always seems to go down.