But, if an algorithm can find this mispriced asset, and trade to exploit it before a human can, then that should improve the markets efficiency and reduce the arbitrage.. or so it goes.
What is the lag of twitter compared to paid news services? Probably enough to make investing in building such system totally unattractive compared to aforementioned paid feeds.
So you'll have to make your trading decisions based on sentiment or even insider info... Very risky and not very profitable proposition...
Not that twitter is totally useless for trading, but not very useful for HFT uses you describe.
But, if an algorithm can find this mispriced asset, and trade to exploit it before a human can, then that should improve the markets efficiency and reduce the arbitrage.. or so it goes.