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Monitoring Social Movements of the Stock Market

Introduction

Have you ever felt like you don’t know how to keep up with the social dynamics of the stock market? This is the first blog post of many that will cover all aspects of Invezo, a market analysis app that provides unique and understandable data to investors of all experience levels. In this first article, we’ll give you a detailed use case on how the Mentions Page can improve your trading tactics.

Don’t Make the Innocent Mistake

Many investors make the innocent mistake of not considering the impact of social media and news on the inexplicable fluctuations of the stock market. This is due to the misunderstanding between how the news and social media react to daily market activities. Coverage by traditional news media predicts decreases in subsequent volatility and turnover, but coverage by social media platforms like Reddit, StockTwits, and Twitter predicts increases in volatility and turnover.

Understanding Mentions

To understand how our Mentions Page can help you, we first need to differentiate leading and lagging indicators. Leading indicators are economic factors that tend to change prior to large economy adjustments. In other words, leading indicators are considered to point toward future events. The news can be viewed as a leading indicator because it’s the first entity to disseminate information to the public. On the other hand, lagging indicators, are seen as confirming a pattern that’s in progress. An example of a lagging indicator is social media because it’s naturally going to react to significant market events and not be the original source of information.

If you’re not familiar with our Mentions Page, it shows you how often stocks are being referenced across Reddit, StockTwits, Twitter, and the news. As a lagging indicator, social media isn’t going to give you the complete picture of what’s going on in the market. This means you must take everything you see with a grain of salt. High social buzz around the stock market predicts higher volatility and returns. It’s important to take note of this trend because there’s inherent risk in a stock/crypto that’s trending on social media where everyone in the world can see it. You’ll ultimately be following the crowd if you do this too often or too late.

As someone who might not have the expertise to determine whether a certain investment is the right decision, it’s good to use the Mentions Page to get a feel for how the market is treating specific sectors. Next time you go through the tabs on the Mentions Page, take note of how many tech companies are trending vs. cannabis companies, for example. This will reveal how the world is treating different sectors of the economy. Then, use this information to sort through our Updates Page and become educated on the company you’re thinking of investing in.

You’re Ready to Go!

That’s it! You now know how to use our Mentions Page to maximize your investing strategies. Investing may seem daunting at first, but once you familiarize yourself with these tools, the sky is the limit!