In trading, small things can make a huge difference. The right trading platform, trading strategy, brokerage firm, and the chosen trading assets can determine whether a trader will succeed or not. But there’s one more essential factor that should be considered – the news source a trader chooses to get market information and updates.
So, in the current market circumstances, retail traders turn to social media platforms to get market updates, news, and commentary, along with using news financial data websites. And rightfully so.
Why Do Traders These Days Need to Use Social Media Platforms?
Every trader knows that finding the right news source is critical to getting the latest updates and analyzing the markets. Thus, most traders create their watchlists, find an economic calendar they like, and use 1-3 specialized trading websites. That’s nice, but for the pre-social media world.
Nowadays, this setup is simply not enough. Even if you are going to use all the news websites in the world, you still need to use social media platforms to be part of the trading world. I mean, if you can’t be on Wall Street, then join Reddit, Twitter, Facebook, and Instagram.
These days, many in the finance industry point out that social media channels have a massive impact on financial assets’ price movements. This phenomenon creates volatile markets, even on days or hours when there are no publications of significant news and updates. More importantly, the news is being published on social media platforms or other online forums minutes or hours before it’s published on financial news websites. And every person knows that timing is among the most critical factors in a trader’s success.
Another reason why many traders are using social media platforms is the lack of news and market updates on some tradable assets. For example, if you are trading wheat, soybean, cotton, or the USD/SEK – you won’t find many news articles online. Instead, you can use Twitter, search for the chosen asset by using trading hashtags and get lots of updates from users and content creators.
So, all things considered, using social media platforms is not only an effective way to get news and updates, but it’s also a necessity these days to stay updated with all the relevant information.
What are the Best Social Media Platforms for Day Traders?
With so many social media platforms around the web, it can be quite a challenge to find those that are best suited for traders and investors. Reddit has undoubtedly gained its place as the most dominant platform after GameStop Corp (GME) and AMC Entertainment Holdings Inc (AMC) stock prices spiked due to user activity in Reddit chatrooms. This ultimately caused the infamous GameStop stock price short squeeze story in 2021.
But even though Reddit is a great place to find unusual investment opportunities (especially in the crypto and stock markets), it is also a pretty confusing place, especially if you are looking for news, updates, analysis, and market commentary. For that matter, Twitter is certainly the most influential social media platform these days. In recent years, Twitter has become the ideal place for any trader who wants to get the latest updates and market analysis about different financial assets.
Obviously, other online social communities like Facebook, Instagram, and even TikTok can be beneficial for getting information, although the interface and mechanism are less suited for trading purposes. Finally, another useful social media platform to gain significant insights is Linkedin, although the platform is better known as a place to get market commentary and updates on the financial industry rather than rely on it as a news source.
How to Use Social Media Networks for Trading?
Generally, knowing how to use social media platforms for trading the markets is not rocket science. As long as you have basic tech skills, you can open social media accounts, follow people, search for hashtags and even share your posts.
With that in mind, here are some critical steps that will help you to get started:
- Open social media platform accounts, preferably Twitter, Reddit, Instagram, Linkedin, and Facebook.
- Join groups and build a network that may help you get market information and analysis.
- Follow influential people and accounts – financial analysts, gurus, CEOs, politicians, news websites, etc.
- Use hashtags to find the asset you are trading on
The Bottom Line
To sum up, there is no doubt that the speed and the involvement of influential people on social media platforms are already changing the online trading world. Whether it is the cryptocurrency market or the stock market, tweets from Elon Musk, Jeff Bezos, and other influential personas can make an impact on the specified market.
Not surprisingly, as social media and trading have been combined extensively in recent years, many trading robots have developed sophisticated trading strategies that have the technology to scan Twitter and other social media platforms and place orders based on certain tweets. For example, some bots were developed based on Elon Musk’s tweets about Bitcoin or Dogecoin.
While many people believe that this can destroy the unique nature of financial markets, others will argue that access to news is far more transparent and fairer than they were in the past. Nonetheless, as there are so many advantages of using these channels as a news source these days, social media platforms have become a must-have trading tool for the average Joe trader.
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