Best Practices in Trading: Building a Learning Network Via Social Media

One of the greatest psychological challenges of trading is a cognitive, not an emotional, one.  It is the challenge of bandwidth:  our limitations in processing large amounts of information at any given time.  Many portfolio managers I've worked with have developed ways of expanding their bandwidth, including building out teams to help with research and execution; connecting with savvy peers to discuss market ideas; and staying in touch with colleagues on the trading floor.  Turning trading into a team sport increases the number of eyes and ears on markets and is valuable in spotting emerging trading ideas.  How many times have I observed traders so focused on their particular trades that they miss what is happening in the broader market?  Tunnel vision is a great way to get blindsided in markets.

What social media is accomplishing is a leveling of the bandwidth playing field for individual traders.  Most independent traders do not have a trading floor to turn to for market color and cannot afford to build out teams of analysts.  Through social media, however, they can turn their trading into a virtual team sport.  Cultivating a focused network of insightful peers adds to the eyes and ears on markets and sparks thinking about fresh sources of opportunity.

This is why building a social learning network is a best practice in trading.  This is a network of peer traders who value your input and provide you with valuable observations and insights into markets.  The key to creating an effective social learning network is selectivity.  A great deal of the commentary via tweets, blog posts, and chat is high on noise, low on signal.  You want a network that provides very high signal value.

A great place to start a learning network is Stock Twits.  The Stock Twits feed is a curated stream of tweets with high information value.  Via the feed, you'll notice certain contributors come up again and again.  These are often high value sources of information you will want in your network.  Of particular value are the Saturday $STUDY sessions from the Stock Twits feed that select specific tweets and links for their valuable content.  In general, the $STUDY postings offer a broad range of observations, analyses, and information.  You'll find particular good links via founder Howard Lindzon and head of community development Sean McLaughlin. 

Yet another place to build your learning network is through sites that comb through content on the financial web and curate selections.  Abnormal Returns offers a broad range of links daily and each week selects top podcasts and highlights the most popular links of the week.  This also is a great way to discover valuable sources of information that can become your regular listening and reading.  On the podcast side, there are the offerings from Michael Covel and Barry Ritholtz that feature interviews with top professionals in finance.  Other excellent sources of links are Josh Brown via The Reformed Broker blog and Barry Ritholtz's The Big Picture site.    

The acid test for any addition to your learning network is that what you read or listen to actually does contribute fresh and useful perspectives to your understanding and trading of markets.  There is much to be said for entertainment and it's easy to get into surface readings of many sources, but what is ultimately valuable is what feeds your head.  You can't solve fresh puzzles unless you have the right pieces.  And you won't get all the pieces if you're locked inside your head.  Through social media, you can move from research to building a virtual research team.  It doesn't matter how emotionally controlled and disciplined you are:  you can't trade the opportunities you never see.

Further Reading:  Finding Trading Mentorship
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