So the self-styled think tank created the Trump and Dump Bot to profit from presidential tweet-lashings. The bot shorts stocks based on the algorithmically detected sentiment expressed in the tweet – the assumption being that castigation by Trump will depress the value of the stock.
A short sale involves borrowing shares and immediately selling them, then buying them back at a lower price once the stock declines – in order to pocket the difference in price.
The risk is that the stock might rise, requiring the short seller to rebuy the shorted stock at a higher price.
Ben Gaddis, president of T3, in a phone interview with The Register, said the firm is not releasing the amount that it has earned but claims the company has made two donations so far to the American Society for the Prevention of Cruelty to Animals (ASPCA).
"So the whole thing actually saves puppies," the company claims.
An ASPCA spokesperson in an email to The Register confirmed that T3 has donated funds and said, "While we are not involved in T3's new social media program, we appreciate their support."
"So far we've analyzed every trump tweet and four have mentioned publicly traded companies," said Gaddis in an email to The Register, noting that the bot has profited in three of those instances. "The latest being Delta today, which he blamed for the long lines at the airport. The bot had a four per cent return on that stock alone."
Gaddis declined to elaborate on the bot's short selling strategy other than to note that the bot repurchases the shorted stock fairly quickly.
"Most of the stocks have actually gone back up," he said. "It's really the market volatility that we're trying to play with."
T3's approach involves using a Python Twitter bot and API calls to services like Indico for machine learning (specifically, sentiment analysis and entity recognition), Clearbit for company identification, Google Finance for stock pricing, and E‑Trade for executing the trade.
Gaddis said he expected that professional stock traders have implemented something similar. Presumably, financial professionals employ more time-sensitive systems that include many of the functions that T3 utilized through third-party services.
Now that the effect of Trump's disparaging tweets is widely known, profiting from it may become less predictable. If you see a downcast puppy, you'll know why. ®