Explanation of the Simulator

>  >  >   spam works: evidence from stock touts and corresponding market activity

What Does the Simulator Do?

The simulation tool calculates the expected return one would make if purchasing a stock based on stock-touting spam. You can purchase a stock from the perspective of either the spammer sending out the touts or a recipient acting on those touts.

As described in the paper, about 75,000 stock touts were collected from data spanning a five-year period. A "tout" for a stock is defined as a day in which at least one message from that day advertising that stock was observed. Touts that were close together in time were then grouped into "clusters," to reflect that spammers tend to send out stock-touting spam in massive timed waves. (Specifically, a cluster was defined as a set of touts such that sequential touts within the cluster were at most five days apart.)

The simulator begins with \$10,000, and it performs one purchase and one sale transaction per cluster, for a given stock. You may choose when the purchase and sale occur, relative to the start of the clusters, the end of the clusters, or the heaviest day of touting within the cluster, defined as the day within the cluster when the most messages touting the stock were received.

Simulating a Spammer

A spammer would most likely buy the stock before sending the tout messages and then sell the stock during the height of the touting. To represent this in the simulator, set it to buy the stock a few days before the heaviest touting day or before the tout cluster, and sell the stock on the heaviest touting day. The default setting for spammers, for example, is to buy the stock the day before the heaviest touting and then to sell it on the day of heaviest touting.

Simulating a Recipient

A recipient would buy the stock on the day he/she receives the tout message and sell it a few days later. Because most recipients receive the message on the peak touting day, they are most likely to buy it then. To simulate the "average recipient," set the simulator to buy the stock on the heaviest touting day and to sell it a few days later. The default setting for recipients sells two days after the heaviest touting day.