A year-and-a-half after closing its short-lived Twitter-based hedge fund, Derwent Capital Markets is back with an online trading platform.
DCM Dealer launched today, financed by Derwent and technology investor Mark Pearson. Like Derwent's hedge fund, which managed US$100 million for exactly one month before shutting down, DCM will focus on Twitter and other social media networks, including Facebook, to gauge sentiment about companies and other trading opportunities.
Using its proprietary sentiment model, DCM rates stocks, currency pairs and commodities on a scale of zero to 100, with the former indicating very negative sentiment in the Twitterverse and the latter very positive. At first, the platform will feature only 250 British stocks, major foreign exchange pairs and commodity contracts, but it expects to add European stocks in a few weeks and U.S. and Asian stocks next month, Financial News reports.
"Today, social media creates a vast amount of information and it has been proven that the sentiment derived from it can predict stock market movements," Derwent founder Paul Hawtin said. "For the very first time, we are connecting this information source to the trading community, opening up the universe of social media data so traders can make more informed buying and selling decisions."
Derwent's hedge fund made 1.85% in its only month of trading in 2011.