Presenting at the Startup Elevator Pitch program during the Forex Magnates London Summit was a collection of pure startups along with industry veterans showcasing new products from established companies. Of those on the side of a pure startup was London based Knowsis, a creator of market sentiment analysis for traders. The product measures comments of trading assets on social networks like Twitter to derive real time market sentiment in the underlying security. Using this data, traders are able to gain insight towards expectations of the overall market. This allows traders to know when the market is bullish or bearish within the network. In a specific example, the sentiment data can be used to provide market expectations before an important news release. Using this information, traders can determine whether a trading instrument has already made its move before the news release, and therefore would be vulnerable to a sharp reversal in the case of bad news.
Filtering the Noise
Any Twitter user will tell you that the biggest impediment to using the stream for trading news and ideas is the proliferation of spam and useless comments. According to Oli Freeling Wilkinson, Co-Founder of Knowsis, “Knowsis has been built by traders for traders, a big data analytics company that makes sense of social media for traders.” As such, by creating a company from the ground up with end user traders in mind, Knowsis believes that they have developed the proper system for handling the Twitter noise. The special sauce of their algorithms is focused on the team using its trading knowledge to curate appropriate trading terms. The system then analyzes which events are capable of moving prices in a given asset. Using this combination, Knowsis believes they are able to remove the noise and have a product that correctly measures market sentiment. Freeling-Wilkinson explains “we identify and amalgamate social media conversations into insightful and actionable content. We really believe that we add market value like never before.”
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Another example of a use of the product is to watch the data’s bullish/bearish sentiment measure to determine when an asset could be ready to move. In cases where positive news leads sentiment to become bullish, but prices aren’t yet reflecting the expectations, traders can buy knowing that interest is rising in the trading instrument.
Currently, Knowsis is distributing the data through an API, rather than a standalone piece of software. According to Freeling-Wilkinson this is aimed at reducing screen real-estate with the goal of Knowsis data being integrated with its customers existing platforms. The product is being offered in different tiers aimed brokers servicing retail clients, professional traders, and news outlets. Depending on the need, Knowsis makes available different sections of its sentiment data to customers.
Putting the Pedal to the Metal – Real Life Test
While it’s always great to have more information, the real test is whether the data actually helps you make money. In this regard, Knowsis has back-tested their results and feels confident of its findings and the value it offers traders. To get a real test drive of the product, Knowsis will be presenting actionable trading data on Forex Magnates for readers to gain an idea of how the product can be used to help them trade. The data will be released in the coming weeks in a follow up article.