University of Glasgow spin-out, Scoop Analytics, uses social media to help traders make faster, smarter decisions about the stock market.
The company is founded by two former postgraduate students from the University’s School of Computing Science and their professor. Today, the Scottish spin-out is unveiling an online tool, the Scoop Markets dashboard, which uses an artificially intelligent algorithm to scour Twitter for breaking news.
The dashboard, which promises ‘market moving news, before it breaks’, provides retail stock traders with instant alerts when relevant information about markets hits social media, but before journalists and other news sources have had the chance to turn the information into news.
According to its founders, rival services often use retweets as a crude indicator of the worthiness of breaking news, but Scoop’s system analyses the text within a tweet, making it faster and more effective at highlighting relevant information.
Scoop’s founders, Dr Phil McParlane and James McMinn, believe that this is the advantage that stock traders need, as the minute news breaks, the impact on stock prices are immediate.
“In a sense what we’re offering traders is a glimpse into the future – a chance to see news as it’s broken on alternative data sources, such as social media, and before it reaches mainstream media outlets,” co-founder MacParlane said. “It may only be a few minutes before the information makes it to the news, but a smart trader can use that time advantage to make more informed trading decisions ahead of the curve.”
In July, the service identified rumours of a merger between JP Morgan and WorldPay 60 seconds before the news broke, increasing WorldPay’s share price by around 14 per cent. The next day, Scoop picked up details that the merger had fallen through. Four minutes after Scoop’s alert, WorldPay’s stock dropped 18 per cent. According to Scoop’s founders, a trader who acted on both tips and bought £1000 in shares ahead of the stock rise, and then sold them again before the drop would have made £248 before trading fees were deducted – a return on investment of 24.8 per cent
In August, Scoop’s algorithm identified the unexpected removal of the Automobile Association’s CEO and alerted users 11 minutes ahead of the Financial Times and 90 minutes ahead of the BBC. A trader acting on this information ahead of it being reported could have made £119 on a £1,000 investment, or an ROI of 11.9 per cent.
“The underpinnings of our algorithm are a closely-guarded secret, but what we can say is that Scoop Markets looks at thousands of tweets every second to pull out data which is relevant to a trader’s area of interest,” co-founder McMinn added. “We’ve put a lot of time and effort into fine-tuning the system since Scoop was incorporated in 2015, and we’re confident that Scoop Markets will provide retail traders with a real advantage.”
Scoop’s pricing model has two tiers, an entry-level package that has a 30-second delay, and a full access package that offers instant alerts. The subscription service model runs on a monthly billing cycle.
Scoop Analytics recently appointed Simon Hardy as chairman, who was previously the CEO of Kelvin Connect. The company was formed in 2015 with support from the University of Glasgow.