How Does Social Media Help Develop A Trading Business?

How Does Social Media Help Develop A Trading Business

How Does Social Media Help Develop A Trading Business

People are spending an incredible amount of time on social media. According to some surveys, internet users spend an average of 6 hours and 53 minutes online every day. Considering that we spend 8-9 hours asleep, this is virtually half of our waking hours.

With that in mind, it’s clear that social media is our main source of entertainment and information. Twitter is nowadays considered a news outlet and even public officials make announcements here first. In other words, customer hysteria and market behavior are often affected by something that a high-profile individual or a business has announced online.

It’s also worth pointing out that the majority of companies that you’re tracking (and in whose stocks you’re interested) are on social media. Sure, the image on these platforms is always fabricated, but it can give you a general idea of what you’re looking at.

For a trading business, social media can be an amazing source of information. You can find social media statistics all over the internet. Sure, forums of specialized prime trading platforms are still more valid, but the number of people sharing their opinions should be taken into consideration, as well.

Moreover, they will likely look up reviews and opinions on businesses and stocks. In other words, there are so many layers in which social media platforms are forming the mindset of the market as a whole. Understanding how social media improves your lead generation can drastically help your trading business. Here’s what you need to know on this subject matter.

Verifying The Source

The biggest problem with leveraging social media influence lies in establishing trust. Anyone can make a profile, put a profile photo of their choosing, and choose a name that they like. Also, they can make a profile in a matter of minutes, which is quite convenient from the perspective of spreading false news.

Building a credible profile takes time. You would be surprised at just how many people will check out your profile after you’ve made a post on Reddit or commented under a Facebook post. The thing is that this always takes time. Even if your profile has all the other parameters and passes all the other criteria, the truth is that if it’s two weeks old, it won’t evoke too much confidence. Not having a social media profile will be interpreted as a red flag. It’s similar to why a brick-and-mortar enterprise needs GMB.

On some social media, account verification (a blue check mark) is incredibly important. This is exactly why this latest $8 plan might change so many things (and not for the better). Now, this doesn’t mean that an unverified account is always to be ignored. This is just that extra verification (an extra guarantee or a safety net).

When it comes to trading businesses, chances are that, from time to time, you might have given out some tips. Sure, no one knows where the market will go, but if your initial estimate was based on hard data (that you’ve provided), people might forgive you even if they’ve been slightly misled by your advice. An informed perspective is always more appreciated than a dogmatic one, especially in a field like trading.

Every Platform Has A Value

While all of these platforms, technically, fall under the same category, the truth is that you have something to gain from each of them.

Reddit 

Take Reddit, for instance. Here, you have the power of the crowd on your side. With so many people sharing opinions and advice, you get a great way to put your finger on the pulse of the market. The karma system gives you a chance to verify a profile rather quickly. The same goes for opinions and predictions.

Just keep in mind that negative Reddit karma can also be a result of an unpopular opinion, not a wrong one. For instance, if (in 2006) Michael Burry posted that the real estate market was about to crash, he would have been downvoted into oblivion. Just bear this in mind when making decisions.

Subreddits like r/walstreetbets were responsible for both Dogecoin and GameStop market saga. Those who picked up on it in time made a substantial amount, while the rest missed out on the opportunity. This is just one real-life example of what the potential of this platform is.

Twitter 

Twitter, for instance, has a financial community known as Fintwit. This is a section of Twitter primarily used to discuss investing, which means that a trading business may use it as a great source of information.

Fintwit News Twitter Account

Keep in mind that this is still Twitter, which means that the standard rules apply. Your feed depends on the people you follow, and you need to pick the right crowd. Sure, here you can listen to the advice of Ray Dalio and Warren Buffet. However, there are a lot of experts out there who are worthy of your attention, as well, even though you might not have heard of them so far.

Pay attention to Twitter arguments, as well. The fact that people are so passionate about a certain stock or commodity means that they’ll be emotional when making decisions on whether to buy or sell. Both sides may have some solid arguments, and it may be up to you to decide which of the two opinions sounds more convincing.

Facebook 

The best way to use Facebook to gather trading information is via groups about trading. Here, experts and passionate traders exchange their opinions on the subject matter.

While some platforms give decent stock market advice, the truth is that it’s far better when the information is getting straight from other traders. Sure, they aren’t insiders but it’s not like if insiders are going to share it with the general public anyhow. With so many different opinions, you’re bound to get a new perspective on these things.

Keep in mind that, just like with Reddit, it’s about the community, not a platform. Facebook has more users than Reddit, which is why you get to see more different opinions. Moreover, this is where you can learn about some of the best stock market research apps. This is true for Reddit, as well. It doesn’t have to be a direct source of information. Instead, it can serve as a method of verifying the credibility of a given information source.

It’s Generational

The most important thing you need to understand is that you have to move with the zeitgeist. The thing is that the majority of millennials (and younger) are using social media as a primary source of information. You see, the market is governed by public opinion and public opinion is formed by these information sources.

As time goes by, social media platforms will be used by more and more people, but it’s not only that. It’s about the financial power of generations. Sure, we can always point to tech moguls who have millions and billions by the time they’re 25, but the truth is that this is an exception, not the rule. As time goes by, younger generations become more financially potent. In the past decades, boomers had substantially deeper investment funds than their younger counterparts. With time, this is shifting.

Moreover, younger generations prefer a sense of community, which is exactly what these trading groups give you. You see that there are others from similar backgrounds and in a similar situation who have decided to take the same path. This sense of belonging and social support also goes a long way in this generation.

Again, we come to the 2021 GameStop controversy. The truth is that when trading was halted, it was the courage and unity of the r/walstreetbets that helped some people stay cool. Sure, the ending of this story is a bit anticlimactic, but the truth is that the value of the stock never went all the way down before the Reddit-inspired event.

Not Enough

Lastly, we must add an important disclaimer. While it is true that you want to use social media as a source of information, it definitely shouldn’t be the only thing that you’re using. You can trust the opinions and numbers you get on Reddit and Twitter, but you need to verify them first. It’s also finding that you discover platforms, journals, and studies this way, but it’s essential that you verify them before trading.

Also, keep in mind that following the crowd blindly is not going to make you money. Sure, the power of the crowd is immense, but you need to be among the first to follow to make money. The sad fact about trading is that, by the time you hear about a great trade, it’s probably too late to make a profit from it.

Finally, being skeptical of social media hype is a defense mechanism that you need to use. Not every stock that’s mentioned is going to become the next Bitcoin.

Wrap Up

At the end of the day, social media is a set of platforms on which like-minded people can meet and exchange ideas. Groups and subreddits can help you narrow down your field of interest and filter the information that you’re receiving. In other words, this is a great place to get information but how you analyze it and how you act upon it is something else entirely.

[See related article: Top 3 Ways Social Media Marketing Can Help Your Cryptocurrency Project]

Top 3 Ways Social Media Marketing Can Help Your Cryptocurrency Project

[Image credits – Main Photo by Moose Photos; other images are from their respective websites and/or social platforms or articles]

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