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Forex trading requires knowledge of current affairs, and fortunately there are now so many avenues for this. In the past, an investor would have to acquire the daily newspaper just to find out if there was any important information.
Now, social media is more popular as traders forego conventional news channels. Use of Twitter in Forex trading particularly has now become the most popular, completely changing the way we trade the Forex market. By the time you get it, another IPO will already be on the way and you having no clue. That right there is the second best reason, using Twitter in Forex trading delivers instant access, second by second. They work for the paper to earn a paycheck and later tweet their opinions to earn followers.
A probable fear among traders would be on the credibility of the source. A paper published on the National Bureau of Economic Research demonstrates how reliable tweets can be. From the study, the researchers found that a trader who solely relied on Twitter Sentiment would be almost 4 times more profitable than one who used a standard carry trade strategy. A similar study was done in to see how Twitter affected returns in the stock market.
This study showed that peak Twitter volumes around news events affected the value of a stock. The obvious effect that Twitter in Forex trading and other financial markets only works because markets move in the direction of prevailing sentiment is also not true. Therefore, it would be difficult for individual traders to affect market direction. It simply means that Twitter Sentiment has to be reliable to have such a high success rate. The most likely reason is that users of Twitter in Forex trading are informed traders who tend to be right.
Which should be good news to other traders relying on Twitter. When using Twitter in Forex trading, keep in mind these tips to avoid losses:. Stay up to date with the financial markets everywhere you go. Forex Industry Top Stories. Why use Twitter in Forex trading? Is social media reliable for trading Forex markets? How do you make the best use of Twitter? When using Twitter in Forex trading, keep in mind these tips to avoid losses: Comments 0 comment s Click here to cancel reply.
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