How does a trader trade on Trump's Twitter news?
Hello, colleagues forex traders!
Social networks have changed our lives, having transformed over the 14 years of its existence and development from a confidential communication tool into a common news platform. In 2019, no one doubts the enormous impact of messages on social networks, especially if the account holder is the head of state.
In today's article, we will look at how currency speculators can use Donald Trump's Twitter forex trading. If you are not subscribed to it, but trade in the Forex market, this article can turn you into one of his most devoted followers!
Along with personal user accounts, corporate and political accounts began to emerge over time. Among the latter, Barack Obama, the first African-American president, managed to attract the largest number of subscribers.
He chose Twitter, a convenient platform for publishing news and short messages, allowing himself to deviate from the official @BarackObama channel and communicate “with the people” through his personal @POTUS account - the abbreviation of the first letters of the official name of the US President.
Having a liberal education, Obama knew how to joke, had the talent of a writer, which led to a record speed in recruiting followers (the record was recorded by the Guinness Book of Records in 2015). The 45th President of the United States who came to replace him is the exact opposite because of his poor vocabulary, rating, and ambiguous reputation. However, this did not stop Donald Trump from collecting 64.6 million subscribers to his @RealDonaldTrump personal account.
Twitter posts change 21st century governance
In 2011, Matthias Lufkens introduced a new term - “twitter diplomacy”, explaining in a detailed article that 97% of countries have accounts on this social network and publish posts with official communiques that can be found out before they get into the news feeds and business press .
Donald Trump in 2017 raised the political importance of social networks to an unattainable height. Exclusive news from the president’s twitter was found out not only by journalists of the business press, but also by the White House administration. Officials often “shrug” when they turned to them for comment. Later they began to admit that some of the messages had not been discussed in advance and were the personal point of view of the president.
The head of state, unlike any other minister or deputy, cannot, after written posts, refer to the expression of personal opinion. Every word is a policy that affects international relations and the economy.
High-ranking politicians rarely or never allow writing messages without moderation by a team that checks words for compliance with ethical, protocol and political standards. Donald Trump is the only head of state to allow the publication of personal opinions, ambiguous phrases, open discussion and insulting other politicians.
The Trump Social Phenomenon
Donald Trump takes the second place in the number of tweets among political figures of the world (in the first - the king of Saudi Arabia). The President of the United States uses two accounts, inheriting the rights to @POTUS from Barack Obama and launching his own @RealDonaldTrump account.
According to linguistic analysis, Twitter for Trump is a tool for sufficiently straightforward and uncompromising criticism of opponents, constant praise of his personality, and demonstration of US superiority.
The President understands and is aware of the power and influence of his own words, trying to inflict maximum damage to the chosen enemy - an individual company or state. In this regard, the term "diplomacy" is not very suitable for the pressure of verbal attacks, where there are no subtle moves and invitations to negotiate. The head of the first world economy holds 140 signs of threat and negativity or expresses complaints and grievances.
Fundamental Twitter analysis of Donald Trump
As mentioned above, the 45th president of the United States is “simple in words”, lucidly wrapping 140 thoughts and ideas in tweet symbols and hinting at future actions. Linguists are still arguing about what intentional or inherent “poverty” of the language means, but it is quite black and white and understandable to traders, even beginners with a minimum level of knowledge about the stock market, currencies or raw materials (in particular oil).
The main rule is to sell everything that is criticized, not paying attention to praise, which usually refers to published statistics that prove, in the president’s opinion, the greatness of America achieved under his leadership.
This phenomenon is called MAGA - the acronym for the campaign slogan "Make America Great Again!"
The analysis of Donald Trump’s criticism is convenient by seriality and focus; the US leader cannot be denied the sequence of movement towards the goal. He tries to go all the way until he independently and publicly closes the topic, considering the goal achieved or the conflict settled.
It is very easy for traders to track the subject of discussion on publications in the business press and wait for a new portion of tweets until the topic runs out. Below are historical examples of messages and the reaction to them of each market that interests Donald Trump. As you can see from the examples, the only correct reaction to the next criticism post was pressing the "SELL" button.
Despite the influence of the person and the power of the American economy, the verbal influence of the president’s messages looks like regular news for traders that trades for one or two hours, strengthening the trend or making an unexpected counter-trend movement.
The time of day also matters: tweets published during the night session will strongly affect Asian markets or currencies, while other trading instruments will show a moderate reaction.
Donald Trump's Verbal Impact on Forex
Messages on the social network of the President of the United States traditionally affect the dollar, slightly affect the exchange rate of the euro, the Mexican peso, the Canadian dollar and the Japanese yen. Random attacks against any currency are possible, the ruble, Turkish lira, Indian rupee fell under a verbal attack.
U.S. dollar “suffers” from the development of events on two topics that have already become permanent:
- China - trade agreement or sanctions;
- Fed policy;
- Currency wars.
In the first case, everything is simple - any promise to introduce (supplement) sanctions results in a sharp strengthening of USD to all currencies.
Investors "go into the cache", dropping stocks and "parking" money in dollars or US Treasury bonds. Positive tweets lead to a fall in the dollar, as the "nest egg" is spent on buying shares in companies that can benefit from the resumption of trade relations and the expansion of purchases of American goods by China.
For example, on June 18, 2019, EURUSD fell in anticipation of the Fed meeting, but the tweet of the just awakened (6-34 NY) President, who promised to meet with the PRC leader at the G-20 summit, marked the bottom and eased the pressure of the bulls.
As mentioned above, traders should consider the time of day and the short duration of tweets. In this example, the tweet fell on the European session, so it provoked a more lively reaction than the unexpected message on the night of May 6th.
The American president decided that China was delaying negotiations, and it was time to introduce new duties. Everyone was surprised: investors, members of the official delegation of the United States, who were at that time in Beijing, and the Foreign Minister of China, who simply could not find the words, but after this incident became the most faithful follower of @realDonaldTrump.
The Forex market reacted to this event with two weak candles down on the EURUSD pair, and the currency pair continued the uptrend.
The main reason for criticizing the Fed is well known - the leader of the American nation was disappointed in Janet Yellen's successor. She was a supporter of hawkish politics, Trump was waiting for his own candidate, who replaced her, low, almost zero rates.
Jerome Powell disappointed the "patron" by raising the bid; after this event, periodic attacks on the head of the Fed became the cause of the weakening of the US dollar.
Any criticism was perceived by traders as evidence of two possible events: the removal of Jerome Powell from his post or the concession to the FOMC, which will lead to lower rates. As a result, a second event happened, but Trump has been manipulating the dollar with this topic since 2018.
Criticism of the Fed's policy affects the weakening of the dollar more than the "kicks" of China. For example, at the end of March, Trump’s late evening post allowed the bulls to almost completely buy out a dollar strengthening for two candles at the end of the day.
In 2019, @realDonaldTrump tweeted another topic that could become a constant source of weakening American currency. The US President decided that many national currencies were specially devalued (especially in China), and threatened to start a large-scale currency war.
The tweet came at the end of the day, but caused volatility, which resulted in a trend reversal and a weakening dollar.
Canadian dollar now rarely gets into the zone of attention and criticism of Trump, the country was one of the first to fall victim to sanctions and surrendered to the “mercy of the winner”. The American president “knocked out” Canada a new trade agreement to replace the NAFTA, sometimes threatening another portion of sanctions via Twitter.
There is a clear pattern: the Canadian dollar falls whenever the president accuses the country of unfair trading conditions, i.e. in 99% of tweets. The reaction of the USDCAD pair to negative messages is solid growth.
For example, on the weekend of June 2018, Trump was offended by the speech of Prime Minister Trudeau, considering a boastful speech about the trade achievements of the Canadian economy. It was enough to have one message about "earnings at the expense of America" so that at the opening of the market on Monday, June 11, the "Canadian flew" by 75 points per hour.
Mexican neighbor He experienced the double anger of Donald Trump: if the topic of the NAFTA free trade zone is closed after signing the new format of the USMCA agreement, then political tensions due to migration problems torpedo the country's currency. The business estimated that the losses from verbal attacks by a strong neighbor exceeded $ 12 billion. It would be cheaper to buy Twitter and permanently ban the account of the American president).
The last verbal attack at the end of May affected the currency by a two-day drop and a loss of 4% of the cost, this was the result of an unexpected tweet about the introduction of a progressive scale of US duties from June 10, 2019. In the evening of May 30 (night of May 31, Moscow time), Donald Trump decided to fight migration, raising monthly customs duties on Mexican imports.
The history of fluctuations in the Mexican peso, cited as an example, ended well; the authorities responded promptly by sending special forces to the borders to stop the new arrivals and give refuge to those who were already in Mexico.
As can be seen from the graph, Trump's satisfaction with the actions of his neighbor was reflected in the return of the course to the "pre-crisis" level.
The topic of duties was raised in relation to India, Russia, Turkey, the European Union, and each time this led to about the same decline in the exchange rate of national currencies in the range from several hours to a day.
Japanese currency It doesn’t suffer directly, despite the misunderstanding between the countries about the trade agreement, under which they are negotiating right now. Donald Trump refrains from the usual style of insulting through Twitter against the authorities of Japan.
However, any statements regarding China indirectly affect the course of the USDJPY pair, and affect the entire Forex market.
Tweet trumpomania and stock market
The stock market is the main goal of Donald trump, the American president has repeatedly presented in the social networks and during public speeches the historical records of the main stock indices as a personal merit. This strategy fits into the MAGA, many experts believe that the S & P500 course will be one of the arguments to justify the re-election of the president.
Tweets that weaken the dollar and call on the Fed to lower rates help market growth, as seen in the April 16, 2018 example. In contrast to the Forex market, where the dollar played a weak enough charge against the American president, put forward by China and other countries for a special devaluation, the S&P index received a strong growth impetus, despite the closed US exchanges.
Donald Trump is not always able to facilitate the upward movement of the stock markets due to the trade confrontation between the United States and China, but in this case the negative has a short-term effect. For example, on May 5 (6th Moscow time), an unexpected message about a return to duties led to the fall of the S & P500.
Any positive statement about China is won back by traders in the stock market, especially if the statement is unexpected. For example, during the lull of negotiations, on June 18, Trump had enough to say about a constructive telephone conversation with Chinese leader Xi Jinping to ensure strong growth in global stock markets, including the S & P500.
The stock market and national currencies are linked by a direct correlation, so any mention of a specific country in the messages of Donald Trump turns into a drawdown on the local stock exchange. The Chinese indices are especially “hit” by the Mexican exchange, in second place is suffering from constant migration attacks.
Actions on other markets are random. Donald Trump can unpredictably "take up arms" against any country, accusing it of trade imbalance or hidden state support for individual industries. As a result, there are threats of duties, which leads to panic sales of shares at the opening of exchanges.
A separate line can indicate the shares of various companies that at different times came under fire from criticism of the American president due to lack of patriotism. In particular, Trump seeks to return part of the production to the United States, so he criticizes car makers and IT companies.
Investors' backlash against criticism of periodicals - it raises the circulation and cost of shares in a publishing house. The praise of retail products is turning into a boycott of customers, but posting such tweets is rare.
Donald Trump struggles with rising oil prices
America will not be great again, if oil rises above $ 80 per barrel, this is the case when the magnitude of the quotation of "black gold" predicts the appearance of critical trump tweets. With a strong threat level, the US president begins to write messages with the "Caps Lock" mode enabled.
The well-known energy market economist Philip Verlinger investigated the relationship between social media posts and oil prices, which allowed him to conclude that Donald Trump’s policies have a long-term impact on barrel prices.
Regardless of OPEC's policies, the 45th US president will not allow $ 90 of oil, a phenomenon called the Trump call option. Traders confidently begin to gain short positions when quotes rise above $ 75, expecting all sorts of measures to curb rising black gold prices to be strengthened.
Tweets are just one of the tools, Donald Trump influences the position of Saudi Arabia and other OPEC countries from the inside out, holding the sale of oil state reserves in the amount of 649 million barrels as the last trump card.
The name of the phenomenon arose by analogy with the confidence in the policy of the head of the Fed: “call option Alan Greenspan” forced traders to buy shares based on faith in incentive measures. The head of the financial department has always lived up to expectations with the reliability of an option that guarantees the conclusion of a transaction at a certain price at the time of expiration, regardless of the situation on the market.
How to automatically track trump tweets on Forex currencies
Social networks are gradually becoming a real source of insider information, which forces many startups to create various applications with "smart filters" that sort and highlight significant infotrends according to the given settings.
The EarlyBird program is one of these innovative Twitter trawls approved by the EU regulator for compliance with MiFiD II rules. The application is “tailored” to the contextual search for relevant information on a given Forex currency pair.
Despite the lack of a Russian-language version, the software works at a level understandable to the trader. Having previously verified your own account and installing the application, the trader can choose:
- Track a specific account or all twitter.
- Currency pairs with a filter of all messages or specific tweets (in this case, Donald Trump).
In this case, only messages containing keywords will be displayed on the desktop or in the application. In the above example, the message will fall into the filter if there is the following: Mexico, migration, duties, etc. The list is constantly updated and monitored by artificial intelligence, a tweet will appear even if it is written with errors.
Donald Trump became the first president in the world able to shape the agenda for the media, indirectly managing the content of business publications, which can only discuss or criticize the position already expressed by the head of state on a particular political as well as economic issue.
Issuing 11 short messages a day, Trump touches on all issues, from the dismissal and appointment of officials, as was the case with Secretary of State Mike Pompeo, to the proposal of bilateral meetings at the level of heads of state (for example, the DPRK).
By analyzing twitter using smart applications, the trader gets an advantage over insiders of the largest companies. In the XXI century, social networks are replacing the media, giving out news earlier than they appear in the feeds of news agencies.