Javascript must be enabled to continue!

Does Disagreement Facilitate Informed Trading?

View through CrossRef

Using high-frequency disagreement data from the investor social network StockTwits, we find that greater investor disagreement facilitates informed trading by activists and short sellers. These findings are unexplained by sentiment, news and retail order flow, and they remain when we measure disagreement overnight, which alleviates concern that disagreement and informed trading respond to a common shock. When short selling is costly, the facilitating effect of disagreement on trading is dampened for informed buyers but is amplified for sellers. These findings suggest that informed traders respond meaningfully to valuation changes induced by disagreement.

Center for Open Science

J. Anthony Cookson Vyacheslav Fos Marina Niessner

Title: Does Disagreement Facilitate Informed Trading?

Description:

Using high-frequency disagreement data from the investor social network StockTwits, we find that greater investor disagreement facilitates informed trading by activists and short sellers.

These findings are unexplained by sentiment, news and retail order flow, and they remain when we measure disagreement overnight, which alleviates concern that disagreement and informed trading respond to a common shock.

When short selling is costly, the facilitating effect of disagreement on trading is dampened for informed buyers but is amplified for sellers.

These findings suggest that informed traders respond meaningfully to valuation changes induced by disagreement.

Related Results

The epistemology of disagreement

The epistemology of disagreement studies the epistemically relevant aspects of the interaction between parties who hold diverging opinions about a given subject matter. The central...

Disagreement and Liquidity

Disagreement is an increasingly popular explanation for trade of informationally sensitive securities. Yet, there is limited research on the relation between disagreement and liqui...

Deployment of a Smart Trading System for Intelligent Stock Trading

In this article we evaluate the deployment of a smart trading system that exploits the features of different technical indicators for intelligent stock trading. Depending on their ...

Studies on Information Asymmetry, Price Manipulation and Investor Performances*

AbstractIn this paper, we examine optimal investment strategies of informed traders in an equity market, where well informed and not so well informed traders as well as noise trade...

When faultless disagreement is not so faultless: What widely-held opinions can tell us about subjective adjectives

When two people disagree about matters of taste, neither of them is in the wrong: There is nothing contradictory in an exchange where one person says 'The rollercoaster was fun!' a...

What (If Anything) is Wrong with High-Frequency Trading?

AbstractThis essay examines three potential arguments against high-frequency trading and offers a qualified critique of the practice. In concrete terms, it examines a variant of hi...

Analisis Perilaku Konsumen Muslim yang Melakukan Transaksi Real Money Trading

Abstract. Technological developments are increasingly rapidly impacting aspects of public entertainment, such as online games such as Mobile Legends. One of the users is the 2018-2...

The temporal characteristics of border trading along the Great Wall during the Qing Dynasty

Comparison study on the border trading between the Ming and the Qing dynasties shows that during the Qing Dynasty, the Great Wall become an important means for the government to ru...