Oil Traders Misread Tweet, Oil Prices Spike 91
cartechboy writes "Ahh Twitter. Sometimes when you combine lightning fast information distribution and humans, minor (or not-so-minor) chaos can ensue. Yesterday, the Israeli military tweeted a commemoration of the 40th anniversary of the Yom Kippur war, which took place in 1973. But the tweet referenced the bombing of Syrian airports by Soviets, and oil traders, already an antsy group, assumed the tweet referred to an attack occurring that very moment. As you can imagine, this had some impact. Within an hour, the global price of oil jumped more than $1, from $110.40 to $111.50 as trading volumes soared. In the end, the traders missed a few things that would identify the tweet as historical vs imminent: Yom Kippur was weeks ago, the Soviet Union is no more, and most important, #checkthehashtag."
Re:Traders are stupid? (Score:5, Informative)
I think you're confusing the following:
1. Investors - which is most of everything
2. Traders - people and their agents who trade
3. Robot programs which trade based on twitter and facebook and newsfeed key words
4. Derivatives - which is a fancy word for Legalized Gambling
While they can overlap, they are not the exact same groups. Most investors know that active management is more risky and tends to be less profitable to actual investors than index trading, precisely for that reason.