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Related Experiment Video

Updated: May 28, 2026

Electroencephalographic, Heart Rate, and Galvanic Skin Response Assessment for an Advertising Perception Study: Application to Antismoking Public Service Announcements
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Electroencephalographic, Heart Rate, and Galvanic Skin Response Assessment for an Advertising Perception Study: Application to Antismoking Public Service Announcements

Published on: August 28, 2017

Tracking traders' understanding of the market using e-communication data.

Serguei Saavedra1, Jordi Duch, Brian Uzzi

  • 1Northwestern Institute on Complex Systems, Northwestern University, Evanston, Illinois, United States of America.

Plos One
|November 3, 2011
PubMed
Summary

Day traders

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Area of Science:

  • Financial markets
  • Computational linguistics
  • Behavioral finance

Background:

  • Keyword volume analysis in internet searches, message boards, and social media (e.g., Tweets) offers insights into public interest and disease trends.
  • Extending this approach, this study investigates electronic communications among day traders to understand their collective market perception.

Purpose of the Study:

  • To introduce a novel method for analyzing trader communication by identifying word bundles that deviate from routine language.
  • To examine how these communication patterns reflect traders' understanding of same-day and next-day market events.
  • To correlate communication focus with collective trading performance.

Main Methods:

  • Utilized a unique dataset of instant messages from all day traders at a single firm over 40 months.
  • Developed a method to identify "word bundles" representing distinct communication patterns.
  • Analyzed the relationship between word bundle usage, market volatility, and trading performance.

Main Results:

  • Identified two key word bundles reflecting traders' understanding of current and future market events.
  • Found that high market volatility shifts communication focus to same-day events, while low volatility shifts focus to next-day events.
  • Demonstrated a positive correlation between traders' attention to either same-day or next-day events and their collective trading performance.

Conclusions:

  • Electronic communication among traders represents a collaborative effort reflecting diverse market viewpoints.
  • Trader communication patterns provide valuable, unique information about their collective market understanding.
  • The focus of trader communication (same-day vs. next-day events) is dynamically linked to market volatility and impacts trading success.

Related Experiment Videos

Last Updated: May 28, 2026

Electroencephalographic, Heart Rate, and Galvanic Skin Response Assessment for an Advertising Perception Study: Application to Antismoking Public Service Announcements
06:39

Electroencephalographic, Heart Rate, and Galvanic Skin Response Assessment for an Advertising Perception Study: Application to Antismoking Public Service Announcements

Published on: August 28, 2017