Social Media: The Impact on the Market and You as a Trader

Social Media: The Impact on the Market and You as a Trader

automated trading, automated trading system, forex automated trading, automated forex trading system, automated trading software

The social media craze is revolutionising how we use the internet but can we use it to improve our trading? Does it serve a purpose or is it merely a distraction?

Many traders are using blogs to share their experiences and views on the market. It’s a great platform for traders to express themselves and to build a following or to promote their ability. Certain blogs can be very helpful for beginner traders to learn from experienced traders or pick up ideas. Even seasoned traders enjoy reading about other traders and what their experiences are. Bloggers like Peter L Brand, Chicago Sean or Charles E. Kirk can add lots of valuable insight to your trading. However like most things on the internet, there is a huge amount of worthless rambling and “copy & paste” blogging. It takes time to wade through all the blogs and determine who can add value to your trading and who does not know what they are blogging about.

Twitter is a very popular information sharing source for traders. The great thing is that it is immediate. Quick tweets on chart set-ups, breaking news or market moves can be sent in the blink of an eye. Speed is the key here. Twitter can be very helpful for keeping your finger on the pulse but it can also easily distract you from your trading. You may be following a myriad of friends, celebrities, colleagues and other interesting people as well as traders and market analysts. Getting bombarded with information and news throughout your trading session may well cause you to lose focus.

StockTwits is an alternative to Twitter. The appeal to traders is that you only get tweets regarding the markets from other traders and analysts without getting distracted by tweets from your friend on holiday in the Caribbean. You do however get bombarded by a myriad of trading ideas and opinions. I have seen recommendations to go short and long the S&P at the same time! Keeping track of Stock Twits during your trading can also cause you to second guess your trading plan when you see contradictory ideas or recommendations. If you are not following your plan, you are going to run into trouble. It is impossible to assess the success of your trading system if you keep overriding it due to information flow from social streams.

Trading forums such as MyFXBook or Forex Factory can be helpful when you are looking for specific information such as how to automate a specific expert adviser (EA) or trading strategy. However, it is too easy to waste away an entire trading session browsing through forums trying to discover the perfect trading strategy.

It has recently been proven that collaboration is extremely helpful in the learning process. Professors at the University of Maryland, Baltimore County use collaborative learning to reduce failure rates in Math, Science and Engineering subjects. As traders we can help each other through collaboration and social media is the perfect platform for this. However, I caution you that the amount of information, views and opinions out there are vast and can easily cause your trading to deteriorate or you to become completely overwhelmed and unable to pull the trigger.

The best way to take advantage of social media is build it into your trading routine but not to rely on it or follow it while you are trading unless you have automated your trading system. Spend a few hours a week reviewing a few blogs you have book-marked or logging onto a helpful forum but do not keep your twitter feed open throughout the trading day. Treat social media as a separate task within your trading; make it part of you research but not part of your order execution. By automating your trading you are able to follow social media channels and use the information to improve your trading system and to find trading ideas whilst not interfering with your trade execution. If information overload from social media channels is overwhelming, then automate your trading strategy to ensure that you remain disciplined.

It’s great to learn from other traders but if you are not trading from a rules based trading plan, you are doomed to fail. Take responsibility for your trading. Don’t blame the guy who sent out a tweet about the EU/USD being overbought, stick to your system and maintain your discipline by automating your trading strategy.