It has taken some time for social media to influence financial markets and trade, but it is finally showing its power. Several aspects of trading are changing as a result of social media. The following are a few examples and how it can help the new generation of traders gain that much needed edge.
Social Media Trumps Ads
2014 ushered in a more social media-oriented financial sector. This change has offered investors transparency and opened up the trading world to social media. It is obvious that investors are not paying much attention to ads. People are seeking out consumer opinions about financial products or professionals. The new generation of investors are finding stocks, brokers, and advisors through social media’s word-of-mouth.
Self-Policing Trading
Insider trading has plagued honest investors for sometime and has turned some away from the industry; most people have heard of Madoff, Martha Stewart, and others like them who did not play fair. What social media does to a particular industry is expose information, making it accessible to everyone. Transparency makes trading appealing to this new generation of traders, which will likely push corporate insiders away from illegal trading.
Rise of Social Trading Platforms
One of the most interesting changes social media is having within the industry is the creation of effective social trading platforms. These platforms function similarly to social media platforms, so many of the skills social media experts have can be applied here. They allow you to follow trading experts, examine tips from others, receive updates from other users, and collaborate with traders while enhancing your own knowledge.
Real Time Stock Updates
Effective trading depends on information, which is updated continuously. There was a time when traders had a hard time accessing information about a stock or acquired asset, but social media has given traders more up-to-date information to base their decisions on. This is even more important now since the market’s liquidity has improved as it only takes about 15 microseconds to complete a transaction. Traders can make faster decisions, which could mean the difference between a loss or a win.
Live Understanding of Events
Yes, updates definitely help traders make decisions regarding their digital or physical assets, but understanding live events can also make a difference to traders. Social media has made it easy for you to stay on top of information that might be relevant. For example, social media platforms can alert traders of a particular event that could hurt a company or boost it.
Staying on top of these events can mean the difference between winning or losing money. Events of interest could be a governmental rejection of a pharmaceutical drug or a political uprising before news even reports it. Coupled with rapid advances in ecommerce mobile app development, modern traders not only have all the information they could possibly desire, but also filtered and delivered to them automatically.
Emotional Response to Assets
Social media has given people the opportunity to not only react more aggressively to events but also to companies. Traders who keep an eye on how social media reacts to news or to certain companies can gain an edge over others. For example, noticing that a growing number of people are sharing a particular brand is a good way to predict a rise in price, which could make someone a lot of money. Of course, this could be applied to times when people are sharing negative emotions about a particular company.
There is no doubt that social media is affecting the world of finance and trading in more ways than those mentioned here. This makes it incredibly important for traders, especially new ones, to have a good understanding of social media and its tools since it might give you that edge you sorely need.
