Foreign exchange traders are beginning to see the advantage of social media as it pertains to their space. While some use Twitter and Facebook just because it’s expected, real traders use it because they need to know what’s happening in real time.

In contrast to having to work in a vacuum in the past, social media provides traders with an opportunity to follow other influential people in their industry and capital markets firms. Here’s five hot tips to assist you in foreign exchange trading.

1. SEC says social media okay

To show the validity of social media today in foreign exchange trading circles, in April 2013 the Securities and Exchange Commission issued a report condoning trading companies’ use of Facebook, Twitter, and other social networks. This means traders can tweet and post updated statuses without fear of working outside the SEC’s guidelines.

2. New social media platforms

While the standards of Twitter and Facebook have proved successful for Forex traders, some very advanced social networking platforms and communities like Quantconnect have also emerged. Other social platforms like eToro, Myfxbook, Currensee, ZuluTrade, MeetPips, ibfxconnect, Fxstat, StockTwits, and TradeSlide have also entered the industry.

Use of these relevant trading networks opens traders to opportunities to gain valuable intel about markets in real time. eToro, considered one of the largest, has processed more than 20 million trades since their social network went live in 2012.

3. Learn from the influencers

Do your homework by learning from the most successful Forex traders and how they use social media to distinguish their individual brands. Witness and analyze what they’re doing right. Match this up with who’s trading what, and master their best practices.

4. Twitter can predict stock movements

In the equities market, Twitter postings are used to predict stock price movements. London-based hedge fund firm Derwent Capital has launched a new spread-betting application for retail traders that uses Twitter’s 350 million daily tweets to create a sentiment indicator that covers currency pairs and other assets.

Sentiment indicators are signposts that help traders understand consumer preferences and shift of preferences.

5. Twitter Analytics

Forex brokers can use Twitter metrics to measure the influence they’ve obtained by using Twitter on a regular basis:

— TweetEffect: filters data from Twitter to show which of your tweets have made people follow you or not follow you
— TweetLevel: measures the importance of an individual in Twitter, based on popularity, influence, commitment, and confidence
— TweetReach: reports provide a thorough set of metrics about search terms and their impact on Twitter
— Twinfluence: determines the primary factors controlling your power and influence in Twitter

Trading concepts

For novices and even experienced traders, it’s important to continue to learn as conditions evolve in the digital age. To learn more about Forex trading, is a valuable resource. Their trading articles provide great tips on day-trading, put-call ratios, and other trading indicators.

Social trading allows traders to trade online with the help of others. They no longer have to work in “silos” with limited communication from the outside world. Social trading shortens the learning curve from novice to experienced Forex trader.

Traders can engage quickly, watch others take trades, then duplicate their trades and learn what prompted the top performer to take a trade in the first place. It’s a win-win for all parties.

Written by Drew Hendricks