Thank to Twitter integrated services like StockTwits and BULLS On WALL Street, learning how and what to trade has really never been easier. That being said, not using these services correctly can actually do more harm then good.
My Rules For Using Twitter To Benefit Your Stock Trading
1. Analyze -With the amount of users and information that is constantly streaming on the networks, it can be very enticing to trade the first stock you come across or start inputting your own comments. Stop…
Just like with any network and community you never want to come in and start actively participating. Rather take a second to step back and see what is going on. See who seems to be the power players, who are the spammers, and how the community interacts overall.
2. Follow and Track – Because it so easy and fast to execute and the information is right there, many times people lose site that trading stocks is actually playing with real money. Money lost is actual money gone from your account. Would you walk into a mall and hand the first person you see $1,000 and tell them to invest it? Probably not, so why would you do the same with Twitter? At least in the mall, you physically see the person.
While you are analyzing the network, follow people that seem to have the same trading goals and strategies as you and track them to see what their results are. If all works out then you know you can trust that individual has a clue.
3. Participate - Once you have analyzed and tracked some good people to follow, now you can start to really participate. Share your stocks picks and analysis and give your opinions on other people’s picks and analysis. Get a dialogue going.
4. Research and Educate - Personally, I really only take stock recommendations from people I have already tracked and followed. Other than that, I usually use Twitter for some type of stock research. For example, if I am considering buying Microsoft, then I will do a search for $MSFT and see what people have been saying.
I will also see what people have recommended and then look at the chart to try and see why they think that way and perhaps learn a thing or two.
What You Don’t Know About People
With 10′s of thousands of stock traders on the network, it is hard to know what somebody else’s preferred profit margin is, if they really executed this trade, if they know are talking about, and what the trader’s time frame is.
For the people you follow, you can really never know what their intentions are 100%. Yeah, they might tell you their buy price, but what if you miss the tweet for when they sell?
All this magnifies why it is important to see if you like the stock before throwing money at it.
Things to remember
At the end of the day, you are the only person looking after your own money. Unless you are paying somebody some sort of fee or commission for these picks, then you can’t blame anybody but yourself. Remember to take any information with a grain of salt, and to conduct your own research before investing any real money.