Has Social Media Increased the Popularity of Trading Markets? Many people are familiar with Forex, the world’s biggest market. It’s possible that the first person you speak to discuss Forex will only recall the stock market and have no idea that we’re talking about trading foreign currency when you bring up the subject.
One would expect this market to be a lot more popular given its size and possibilities for profit. Because the Forex market was previously closed to retail investors and has only recently been available to the general public, this is most likely the case.
Has Social Media Increased the Popularity of Trading Markets?
A lot more attention has been given to it in the last several years, especially because of the worldwide web’s influence. Various social networks and the enormous number of brokers and dealers registered there had a major influence on this. Let’s take a closer look at how social media has affected the trading markets.
Influence of Social Media on Trading Markets
Financial markets will continue to be influenced by social media, as a new generation begins to save and invest. This entails both potential benefits and potential drawbacks. Market openness and efficiency may be improved by online information exchange and conversation.
When it comes to deception and human behavior manipulation, social media is a well-known vehicle. From state-sponsored organizations to organized crime, they might be used as a weapon to undermine market integrity and financial stability.
Liberal democracies with strong finance regulators face an uphill battle. Financial authorities must work together with intelligence agencies and other relevant components of the executive branch to combat information operations. This needs regulations that make it obvious what each party’s function is and promote mutual trust between them.
New traders may immediately acquire assistance from more experienced colleagues or even access a collective bank of ready-made ideas, which is generated by the community of traders.
Financial Market Content Increases Across Social Media
There is no doubt that the volume of Forex-related material on the internet is increasing. Unlike LinkedIn and Twitter, which have business-oriented architecture, Facebook is more of a social network for friends and family.
On the other hand, Twitter and LinkedIn provide a far wider range of potential audiences and publishing options for Forex information than do Facebook’s dedicated Forex pages.
It doesn’t matter whether the material is in the form of news, analytics, or articles – all three social networks may be utilized to spread it. With regards to the ability to disseminate information and communicate, social media is an unparalleled instrument.
No one would be surprised if several financial blogs and sources devoted to educating and enlightening traders set up social media accounts on various platforms.
Social Media And Investing Community
An increasing reliance on social media and an increasing preference for a digital lifestyle has aided in the flow of information that affects investment choices.
As a result of the emergence of social media platforms like Twitter and LinkedIn, as well as Reddit and Instagram, investors now have easier and faster access to many online information sources.
Institutional investors utilize social media regularly, and around 30 percent of them say that the information they obtain on social media has affected their investment recommendations or decisions. 34 percent of retail investors, on the other hand, have made at least one investment modification as a consequence of social media announcements.
The meme stock craze has intensified the effect of social media on investment, but it is not a new phenomenon. Investment information has been more accessible for investors since the Securities and Exchange Commission (SEC) started permitting publicly listed corporations to post news and profits through social media platforms in 2013.
Social media has not only sped up the transmission of information among friends but has also improved financial literacy. It should also be noted that Gen Z and Millennials are more likely than any other generation to seek out financial guidance online.
What platforms are these young investors using to make their money? TikTok and Instagram are the most popular sources of financial information for Gen Zers, while Facebook is the most popular source for Millennials. Institutional investors, on the other hand, almost exclusively utilize LinkedIn to do investment research.
Social Media Influence On Retail Trading
New low-cost, user-friendly financial applications have been boosting nonprofessional trading for a few years now. Apptopia, a market research organization, found that between 2015 and 2019, downloads of the top seven trading apps in the United States, independent of traditional investing companies, increased by 126%.
The coronavirus pandemic of 2020 and 2021 led to an increase in interest in financial apps, both in terms of new users and the amount of time each user spends on the apps each day. When Robinhood filed for its IPO in June 2021, it revealed that the company had 18 million funded accounts.
Overall, the phenomenon is still in its infancy in terms of dollars. Even though many people participate, they only put in a little amount of money. Retail traders, on the other hand, may have a significant influence when they target smaller equities as a group. These groups can get together and take action at cheap cost and lightning speed thanks to social media.
For individual traders looking to share investing ideas and work together, the wallstreetbets Reddit community has evolved as a valuable resource. The initial surge in early 2021 was sparked by a few important users who had a positive outlook on GameStop’s future possibilities.
About 2 million people subscribed to wallstreetbets before the GameStop incident. It had crossed the 10 million mark by July 2021. Despite the financial losses of numerous members, lively conversation and trade went on.
It should also be noted that there’s an element of techno-utopianism and profit-seeking in this approach, which can be traced back to the realm of crypto-assets. Wallstreetbets and cryptocurrency forums do speak the same language, have many of the same users, and use many of the same trading applications. Both are at a fork in the road where the internet and the official banking system meet, although in different ways.