Do we recommend StockTwits for Stock Traders & Investors?
What is StockTwits?
For public traders or investors, there are some positives and some negatives about StockTwits. The first positive is that it's a free open source or discussion forum for active traders. Not that there's an important difference between traders and investors. Traders tend to do day-to-day trading. Think short term with traders. Meanwhile, investors could be one year-plus in terms of their investing horizon. Think long term with investors. There is a level of discussion that one can draw upon for investing, that you can gain some insight and provide you with an advantage over another investor, i.e. make some money. I like that it's free and that open discussion is there.
In addition, StockTwits is great for sentiment and trending stocks. One of my favorite parts about the website is its trending section at the top header of the website. The other thing is they've recently integrated Robinhood trading. Robinhood is a fantastic platform, and I know that through their partnership, StockTwits will make money on each trade. StockTwits also gives investors access to invest without having to log off the platform.
The founder of StockTwits, Howard Lindzon, is an analyst and an angel investor. He is phenomenally important in the industry. He's a smart man, and he's somebody who all investors should follow in terms of the markets and trends. I love that he's created this platform, so I just wanted to mention him briefly.
StockTwits gives investors access to invest without having to log off their platform.
What are some things to beware of before you use StockTwits? Well, there's two primary negatives that they've got to improve.
One is there's way too many trolls and biased traders, trolls being people that are just trying to amplify and to create noise for signaled investors like myself. I know that StockTwits are working on creating a flag system to address this problem.
For example, let's say you post a particular comment on one stock symbol. Let's say you post a comment on Applied Materials, which is AMAT, you'll notice there are a bunch of people with random profiles who are making comments and trolling the platform and the discussion, creating noise as opposed to signaled information. Hopefully, StockTwits can improve and distinguish who's creating noise versus signal, or else it won't be as widely adopted.
There's also biased traders. I think Robinhood helps with disclosure because there are people that are probably just trying to pump up stocks on StockTwits, which is against the law, by the way, so do not do that. There are biased traders and investors who just hold the stock or have bought the stock, and then they create positive sentiment. That may or may not be helpful, but the point is that StockTwits needs to identify these biased traders.
The bottom line is there needs to be a way for one to know if somebody is actually invested in the company or if the company is simply part of their brokerage. My second negative on the site is that there has to be a way to verify profiles and identities, which would create a layer of legitimacy. People are inherently cautious about investing, and trading especially; unless StockTwits creates verified profiles and identities where users can verify investors who invested in a platform, not just trolls or biased people.
StockTwits needs to find a way to verify legitimate investors from trolls or biased investors.
Overall, I give it 3 out of 5 stars as of now. StockTwits is a great site, but there are many things that need to be improved before it is widely adopted by all investors. They kill it with SEO (search engine optimization). Any time you search for a stock, you'll find them on top of your search. I applaud them for that, because that'll drive up traffic. But to create a legitimate billion dollar-plus business, there has to be legitimacy. There needs to be verified identities for profiles, and they need to provide linkages to brokerages.
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