Trading and Social Media | SocialExcerpts

Trading and Social Media Jan 10

If we talk about faster adaptation of new technology, capital market has always been the pioneer. Traders need to access analytics tools and data wherever they move. For this reason, social media has also been embraced by traders a long back. If you are new to the technology and want to venture out in trading industry, here are some pointers for you.

There is an innate relationship between capital market and social media. Social media receives huge data everyday, which is the prime ingredient of measuring social mood of people, which in turn is a biggest decider of stock prices. A Pace University study clearly showed a direct connection between brands on social media and their share prices. According to the study, the popularity of a brand on social networking channels have direct impact on its stock prices.

For these reasons, international traders are shifting their concentration on social media, big time. There is a different between professional traders and online traders. Professional traders don’t like to share any information with others, while online traders actively share their trading history and trading positions online. They are using social media in order to get tips and ideas about the market. Social media also helps the traders to analyze sentiments. Location plays a key role here. If you are a UK trader, a social media update from Nepal would hardly affect you. Moreover, the demographics of the user should also be taken under consideration.

Apart from that, you should also keep an eye on associated news feeds. For example, currency movements have always a deeper impact on commodity price. So, you should track the news feeds related to currency movements as well, to do sentiment analysis of a particular region. Stocktwits helps the traders to participate in the international community of traders and investors, so that they can get ideas easily. Traders can connect with worldwide investors of similar profile on the platform. Similar services are offered by Currensee.com and Zecco’s Wall Street.

Predicting prices of stocks based on social media mood would be the next big milestone for social trading. Although in its infancy, this idea can take shape if the voluminous data floating on the web is analysed judiciously. Relevant social media feeds need to be taken into account along with news feed to successfully predict the price of a commodity.

While the global investors have already signed up for social media, Indian market is slowly catching up. SEBI, the stock market regulator is playing a pivotal role in this. Stockezy, launched in 2008, has 40,000 members already. By the end of 2012, a few more sites and platforms are expected to change the entire Indian scenario.

Thus we can see that the importance of social media is transgressing sectors. It will be criminal to ignore this important tool for business and trading.

If Social Media had stocks, it would be soaring right now, wouldn’t it?

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