Social media platforms: the new trading floor
In recent years, social media platforms have evolved to become far more than safe spaces to share personal updates and highlights. Nowadays, they’re a trusted source of information and news. With many major TV outlets now blaming the rise of social media platforms like TikTok for dropping TV views, it’s clear that social platforms are here to stay.
But it’s not just TV broadcasters that have been impacted by the rise of social media. Trading platforms have, too. In this article, we delve into how social media has changed the trading floor forever.
What is social trading?
Social trading isn’t a new concept. But using social media to trade is.
Social trading is an umbrella term that refers to an investor copying another investor – usually one with more experience. This is a way traders can cut down on the time they spend meticulously researching the markets, reducing potential stress.
Social media trading is slightly different. In recent years, newbie investors have started to immerse themselves in the world of trading via social media before downloading a trading app. While it’s good to democratise trading, experts are wary of the power of social media. For example, social media has been known to turn the tables of Wall Street, causing chaos within stock markets.
The power of social endorsements
Social media not only empowers newbie traders – it’s also crucial for monitoring trends, markets and more. One example of this is celebrity endorsements. Traders must look to social media before placing a trade as endorsements by influencers can cause the price of shares or assets to skyrocket – or plummet. One instance of this was when Elon Musk took to Twitter to announce his dissatisfaction with crypto after he lost $140m on Bitcoin. Shortly after, prices plummeted.
Hashtags, trends and forex
As well as helping traders find trading tips and tricks, hashtags are crucial for following market trends and sentiment. For example, by following hashtags like #economiccalendar or #centralbank, traders can stay ahead of the curve when it comes to economic news, press releases or other events that can change a market’s trajectory.
They’re convenient, accessible and one of the fastest ways to find market insights.
Social media: good or bad for forex trading
While social media can wreak havoc on the stock market, it’s not all bad news. Experienced traders will know that market volatility leads to opportunity as it gives traders the chance to make more profit in less time.
Whether social media is good for forex traders depends on your risk appetite. If you like to play things safe, the influence of social media is probably not your friend. But if you like to engage in riskier trades in the hope you’ll reap the rewards, social media might just be your new best friend.
*This is a collaborative post.
