Has Social Media Fueled The Stock Trading Market: An Analysis

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Social media has influenced retail traders in the ways they have behaved in the past years. Sites like Twitter and Reddit have essentially become an information hub where fellow traders share trading information.

We have already faced many stories that show how social media influences traders with their decision-making. For instance, the GameStop Corp event where the retail traders from the Reddit chatroom targeted a single stock due to its high degree of short interest.

Has Social Media Fueled The Stock Trading Market - An Analysis

With that being said, it is true that social media platforms are a great place to familiarize the trading skulls; experts believe that it is still a long way to go.

How Does Social Media Influence The Finance Market?

After seeing a post on social media where people are making thousands of dollars in the stock exchange, some people start looking for what is the best stock to buy right now.

Social media has become an emotional data mine. This is why many companies use social media as market surveillance and insight on emotional sentiment data.

Meme Investing

Interestingly, the pandemic situation has created the best environment for the new batch of investors to enter the stock market. Lockdown and other restrictions slowed the cash flow, and hence, people could now have enough to invest in the stock market.

For some people, they have even used their stimulus check to invest in the trade market. And thanks to commission-free trading platforms, trading has never been this easy.

With so much time to spare, people come with new investing ideas on social media platforms like Twitter and Reddit. This form of trading gave rise to a different style that has never been heard in the tradition of a trading textbook – Meme Investing.

Meme investing is a set of ideas that goes viral on social media platforms and is opposite to the traditional trading fundamentals.

Allure Of New-Generation Platforms

With the commission-free trading platform and social media platform offering the relevant information to make trading decisions, together, they came out like a manufacturing house producing thousands of new investors in a very short period.

Trading platforms and tools like robin hood made stock marketing easily accessible. Once a person is sucked in the free commission services, the floodgates are open with a promise of high returns. Social media platforms have become a strong lure for young inventors who often spend most of their time on Social Media.

In addition to that, social media platforms are creating a FOMO (Fear of missing out) environment, where the new generation wants to take instant action with whatever primary information they get on social media.

Finance Industry Influencers On Social Media

It has long since become essential for the finance industry influencer to share their thoughts and market performance on social media platforms. People like Paul Krugman run a Twitter account with more than 1.5 million followers. He keeps updating everything on social media about what is happening in the trading industry or what he believes might happen in the market.

This is just a single name; there are plenty out there on social media who do the same thing. With this evidence, it will not be wrong to say that the information that appears and is shared on social media platforms plays a vital role in strengthening the efficiency of the stock market.

Impact Of Social Media

Social media has become an important place for people to discuss economics and analyze the financial performance of the market. It is clear that the impact of social media like Twitter, LinkedIn, and Facebook has become important in the financial world.

Wall Street brokers and businesses use sentiment analysis to collect the relevant data to make trading decisions. This shows that social media has really entered a new realm. Social media has become more powerful and influential than ever.

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