App lets anyone track Twitter to play the stock market

Niall Firth, technology editor

(Image: Alex Segre/Rex Features)

There are lots of ways to decide whether or not it's worth investing in a company. You can look at the figures, sure, or you can look at its forecasts for the coming year. Or you could just see what Twitter has to say.

That was the idea behind the launch last year of a hedge fund that used Twitter sentiment alone to guide its choices. Now the firm behind it has announced that it is launching an app and website that will let any investor do the same thing. If they dare.

Derwent Absolute Return Fund, set up by Derwent Capital Markets, was closed earlier this year, after a fairly respectable performance of around 2 per cent growth in 2011 - a particularly bad year for hedge funds. It worked by mining tweets for information that gave a clue as to how the public was feeling. The idea was based on a research paper published in 2010 which showed that tracking the emotions expressed in millions of tweets closely matched - and even predicted - the performance of the Dow Jones index.

The new platform, due to launch over the summer, will use the same software to give would-be investors a "sentiment rating" in real time on any stock or currency - and then let them trade instantly.

"It means that people will be able to monitor global stock sentiment for the first time and use the information to influence their own personal investment decisions," says Derwent Capital founder Paul Hawtin. "I guess in the same way that GPS was developed by the military and then years later we all had TomToms in our cars."

Access will be free, but would-be investors will have to open a dealing account with the firm before they can use it. That ?100 burning a hole in your pocket? Why not see what Twitter thinks you should do with it?

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