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Messaging platform, StockTwits, is designed to allow traders to share news, tips and ideas on securities and the stock market in general.
StockTwits is just one of many such resources used by traders; websites, apps, news feeds being some of their competitors. Although it is free to use, StockTwits still has to provide you with an incentive to use it rather than these other media.
So, considering that, let’s have a look under the hood of this financial information vehicle and see if it’s worth the ride.
The elevator pitch for StockTwits is that it is the Twitter For Traders; so pretty much anyone will easily and quickly get the hang of it. Rather than hashtags, ‘cashtags’ are the order of the day in StockTwits for sharing brief stock information posts.
It also uses tools that are pretty standard on other trading forums and platforms, so there’s no big deal about that. StockTwits does seem to be a bit more streamlined, though.
As far as usability goes, StockTwits is easy; as I said before, it’s just like Twitter.
The toolkit is pretty useful in terms of aiding navigation through the ocean of messages that are posted every minute.
Sorting can be done by sector, securities, what’s trending, bulls, bears and a whole lot more. Messages can be categorized into the following streams:
A popular feature is the StockTwits ‘heat map’ which displays a graphical comparison of securities based on activity and the sentiment of the market. Another, the Watchlist, keeps tabs on the market’s hottest stocks.
Quick and effective navigation is undoubtedly one of StockTwits best features for traders.
StockTwits now has a seamless interface with online broker Robinhood. By enabling this function, you can quickly and easily move between platforms; trading on Roninhood, discussing it on StockTwits. This allows for a quick reaction to a hot stock tip.
StockTwits itself is not the source of the information on its platform, it is the users that provide the information. Like most other things, if you put crap in you get crap out. Although not everyone has a bad experience on Stock Twits, it does have its fair share of crap put into it!
One of the reasons for this may be down to StockTwits being unmoderated and unregulated. So, as far as quality and validity of information goes, it is pretty much a jungle.
Of course it does have some gems of information in there, but extracting those from the deep mine of dross is expensive in terms of time and effort. Verification of information from StockTwits is probably the number one gripe that users have. It can be so bad as to turn traders back to traditional, more reliable sources of information.
What these traditional platforms lack, however, is the scope of ideas, news and opinions that StockTwits offers.
To help you safely traverse the slippery slope of poor information that you may come across on StockTwits, here are a few things to look out for:
It could be recommending a company they work for or promoting a security that they own, StockTwits is full of people who have a biased agenda.
They are easy to spot because they will simply spout the same lines time and again, never actually engaging in a conversation that is contrary to their own agenda.
Volume is their goal; they believe that shouting the most and the loudest wins the argument.
Unlike traditional sources, StockTwits has no, nor requires no, means of establishing credibility of financial information. They replace referencing and validation with popularity; “hey, this guy’s really funny, let’s invest our life’s savings with him!”. Not a great basis for financial credibility.
Yes, you can find credible posts and people but, once again, you’ll need to work at it.
The sheer volume of noise on the platform makes StockTwits a difficult place to get good information from. Users frequently complain of the high volume and low quality of opinions that are spouted; making it difficult to make any reasonable assessment about a particular security or stock.
Rather than being based on a bias towards a bull or bear market, the vast majority of ‘opinions’ seem to be voiced simply in order to contradict another user and often even their own. Thus, making it incredibly difficult to sort the good information from the bad.
Whether you value StockTwits as a platform or not may boil down the type of trader you are and your personality. If you are content digging through tons of information to find a few gems, you should find Stock Twits suitable. If you are constantly on the lookout for new ideas or a fresh trading edge, Stock Twits might be your ideal platform.
It does contain plenty of good, actionable information that can lead to very successful individual trades. It is a matter of having the patience to find them and keep finding them repeatedly.
However, for the steady traders who feel more comfortable building their strategies on foundations of reliable information and credible opinions, it may be worthwhile looking elsewhere.