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Stocktwits Review: Can A Social Network Make You A Better Investor?

As a beginning investor, you may feel overwhelmed and lonely. Not only is the United States stock market a complex system made up of a long list of moving parts, but most people in American society have learned not to talk about their finances. Therefore, there are not many people to talk to about the challenges you face when investing.

The whole situation is quite ironic.

According to a 2020 Gallup poll, 55% of Americans own stocks. That means 55% of Americans have at least some knowledge about investing and how the stock market works. While most Americans own stocks, the vast majority don’t talk about them openly much, leaving beginners to their own devices.

However, technology has changed the world in many ways. A key technological innovation in terms of human communication is the social network. Social media has made it possible to catch up with friends from elementary school, stay in touch with distant family and friends, and meet new people.

Stocktwits took this concept one step further by creating a social network specifically for investors.

What is Stocktwits?

Stocktwits is a social network that was designed with the investor in mind. Founded in 2008, Stocktwits was created in an effort to build a community where investors, traders and others interested in the stock market could find like-minded community members.

Today Stocktwits is a massive network of investors. According to TechCrunch , the social network had grown to attract more than 1.5 million active users in July 2016. Today, the social network has more than 3 million members who generate a total of 5 million messages each month.

Key features

Stocktwits solves various problems for investors with a number of useful functions.

1. A platform for building relationships

Stocktwits gives novice investors access to experts who don’t just care for themselves. The vast majority of network members will be happy to answer questions about any action that interests you. All you have to do is collect the question.

You read that right, it’s a “cash label”.

Cashtags on Stocktwits work very similar to hashtags on Twitter and Facebook. All you need to do is type the dollar sign immediately followed by the stock price. For example, if you want to know where to find the latest Apple press release, you should write a message on the net to the tune of:

“Does anyone know where I can find the latest $ AAPL press releases?”

Because you have marked $ AAPL in cash, your message will be displayed to all community members who follow Apple’s actions and displayed on the Apple message board. You are probably surprised at how many people respond.

Small conversations like this often lead to new investor relationships on the social network by connecting investors with similar interests. Relationships are some of the most valuable assets you will ever have. This is the case with investment and life.

2. The Stocktwits heatmap: harness the power of social volume

When something good happens to you, it is natural that you want to share it. For example, when you came home from your most recent vacation, how many people did you show photos to?

The same goes for investing.

When investors find what they think is a great investment opportunity, they like to talk about it. Because Stocktwits has become the social network of choice for investors, many of these conversations happen here.

Stocktwits saw incredible value in social volume , a measure of the rate at which investors and traders shared information about a stock on social media, and decided to build a tool around it. That tool is known as a Heat Map. Seen in the screenshot above, the Stocktwits heatmap consists of several colored boxes, with colors ranging from light green to dark green, gray, dark red, and light red.

There are two main factors to pay attention to when it comes to the Stocktwits heatmap:

  1. Box size . When you first load the heatmap, you will see several larger boxes labeled by sector. The bigger the box, the more investors are talking about stocks within that sector. Once you click on the sector that interests you, you will see several boxes of different sizes and colors, labeled by tickers. Larger boxes are the most talked about stocks, while smaller boxes are the least talked about stocks. Ultimately, the bigger the box, the higher the social volume, and if a lot of people are talking about a stock big enough to make a big box, then there’s likely great news surrounding that stock. 
  2. Color of the box . The color of the box also makes a big difference. The light green squares are the big winners of the day, with current session gains of more than 3%. A dark green box means the stock has generated current session earnings of less than 3%. A gray box means that the stock is trading unchanged. A dark red box means that the stock is experiencing losses of less than 3%, and a light red box means that the stock is experiencing significant declines of more than 3% in the current session.

Both of these indicators are incredible value if you are looking for an opportunity in the stock market for multiple reasons:

Social volume

  • News . High social volume is a sign that there is great news surrounding a stock. Often times, the stocks that see the highest social volume are at critical points in their growth, representing strong buying opportunities.
  • Liquidity . Liquidity is an important aspect of any investment. The more liquid a stock is, the easier it will be to get your money back if you need to make a quick exit. When social volumes are high and prices are appreciating, liquidity is also high. 
  • Momentum . Lastly, many investors look to high momentum stocks for quick profits. Of course, any quick profit carries a high level of risk, but this is a solid strategy for investors who know the market patterns well. Stocks that see high social volume in Stocktwits are generally experiencing momentous moves in one direction or another.

Price movement

Although the Stocktwits heatmap only provides information on price movement based on the current trading session, this information can be useful when looking for investment opportunities. It is never a good idea to bet against the trend. Therefore, when looking for investment opportunities, it is best to look for stocks that are experiencing an upward trend. The green boxes on the heat map offer various actions to consider for further due diligence based on price appreciation.

Also, if you notice that a stock you are investing in is trading in the red, it’s smart to review that stock and make sure it still represents a great investment opportunity.

3. Ticker pages give you access to a wealth of data

If you asked a successful investor about the most important aspect of investing, they would probably answer with one word: research. The most successful investments turn out to be the most educated.

Stocktwits is a great place to find the information you need.

The social network offers a listing page for every stock listed on major exchanges, including Nasdaq and the New York Stock Exchange. The quote page for a stock on Stocktwits is where all posts with that stock’s cash tag end.

The vast majority of these posts are investors sharing their personal views on the stocks the page focuses on, but there is also other valuable information that is easy to dig up on these pages. This information includes:

  • Investor opinions . No matter how well a company does, investor sentiment is ultimately what drives price movement. If the general opinion of the investment community around a stock is optimistic, there is a strong possibility that the stock will see growth in the future. Conversely, if the investment community has a bearish sentiment, stocks are likely to notice declines in the future.
  • Analyst opinions . There are several websites that track changes in analyst opinions. Unfortunately, keeping an eye on all of these websites is next to impossible. However, when analysts initiate coverage or change their views, there is an extremely high probability that the change of mind will be shared on the Stocktwits quote page for that stock. 
  • Fundamental and technical data . As is the case with analyst opinions, there are several websites that track fundamental and technical information about stocks. When substantial changes occur within this data, those changes are generally shared through Stocktwits. 
  • Expert content . If you plan to sell art, you will probably join art websites, go to art exhibitions, and connect with the art community. The same goes for investment experts. Since Stocktwits is the largest online community designed specifically for investors, experts often share their articles, videos, and other online content on their Stocktwits portfolios with cash tags resulting in these posts being shared on trading pages. quotes. Ultimately, this leads to a great accumulation of expert content to dig into when doing your research before an investment.

4. The Daily Rip sets the stage

Stocktwits members will receive a daily email known as the Daily Rip. Email is packed with valuable information and actionable information, including:

  • Coverage of the most important stories of the day . In the email, you will find a quick rundown of some of the biggest stories in the stock market. In particular, the stories covered are generally about big swings in large-cap stocks or moves in stocks with high levels of social volume. Due to the popularity of hedged stocks, it wouldn’t be surprising to see one or two names you invest in at least once a week, making the Daily Rip a great way to keep up with the times on the stock market. values.
  • Upcoming earnings reports . Listed companies are required to keep investors current in terms of financial performance. The Securities and Exchange Commission (SEC) requires publicly traded companies in the United States to report their financial results both quarterly and annually. These reports are generally published in strict accordance with a schedule and act as important catalysts. If a company generates more revenue, profit, or a combination of the two that analysts expected to see, investors generally react positively. On the contrary, if analyst projections are ignored, the result is usually a decrease. The earnings reports also contain key information related to operations, management, and all major aspects of the business. As a result, paying attention to earnings reports is an action that can lead to higher profits in the market. Stocktwits’ Daily Rip email provides a list of companies that are expected to publish their earnings reports during the next three trading sessions. 

5. Earnings Calendar Points for Upcoming Catalysts

If you want to have a little more time before earnings reports, Stocktwits has the answer for you. The social network provides a detailed earnings calendar , pointing to earnings reports weeks or even months in advance.

The data is provided by Benzinga and is also available on their site. However, Stocktwits provides a clearer and more user-friendly display of upcoming earnings reports.

Advantages

Stocktwits was one of the first social networks to specifically cater to the investment community. As a pioneer, the use of the social network has several important advantages:

  1. A great community . As one of the first social networks designed for investors, Stocktwits has attracted a massive community of users, from newbies to experts. With such a large community, investors can not only connect with and learn from others, but also understand the general opinion of market participants.
  2. Free to use . Everything Stocktwits offers is free for the user. The website is 100% ad-supported.
  3. Intuitive tools . The tools provided by Stocktwits give you detailed information on the stocks you are considering investing in. Additionally, the tools offered give users a way to identify stocks that are moving and have the investment community behind them.

Disadvantages

There are some downsides to such an intuitive free tool. However, some users have experienced problems with the following:

  1. Only major publicly traded stocks . Stocktwits only provides information on stocks that are listed on major stock exchanges, such as the Nasdaq and the New York Stock Exchange. So if you’re looking for information on stocks, bonds, and other over-the-counter investment vehicles, Stocktwits is not the place for you.
  2. No social network should be your only point of investigation . Anyone can post information on Stocktwits. Much of what you will find is speculation and opinion. As a result, it is important to research through reliable sources such as Forbes, the New York Times, and other well-known media outlets. Investors should also take the time to read press releases and examine SEC files for the full history of the company before making an investment.

Final word

Social media is just one of many ways that technological innovation has changed the way consumers live, breathe, and communicate. However, social media isn’t just a fancy way to connect with old school friends or stay in touch with family abroad.

With the introduction of Stocktwits, social media quickly became a way to connect with other investors, measure overall market activity, and find stocks with high social volume and big news.

When looking for new investment opportunities, Stocktwits is a great place to start. However, it is important that you never take anyone’s word for the direction in which an action is headed. While Stocktwits is a great place to find opportunities and seek expert opinions on the stocks you are interested in, you should always take the time to immerse yourself in SEC filings, investor relations websites, and other resources when conducting your business. research. Nonetheless, Stocktwits is a compelling tool that complements almost any investment strategy.

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