Ep 87: Filtering Through Social Media When Trading Stocks

June 2nd, 2016

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Hey, this is Sasha Evdakov, and welcome to another episode of let’s talk stocks. Today’s episode is going to be an interesting one because it’s going to be a social media episode. I want to share with you some thoughts about trading social media or watching social media. This applies not just to social media. It also applies to the news as well.

I believe that social media along with news, along with just general information online is helpful to get you started in trading. And what I mean by that is, it’s useful to open your eyes up to new terms, new vocabulary, people’s mindsets and thoughts.

But unfortunately, there is one of the major problems that I want to mention. When it comes to social media and this news input and all the other avenues of information, is that sometimes it warps your mindset, it twists your position, and it sucks you into thinking and believing a certain way.

My goal

When I’m teaching and educating, when I’m sharing thoughts and concepts, my goal is to take you out of your brain. I want you to start looking at things from an outside perspective. Something like looking at yourself from an outside view. That’s my initial goal for you as you listen, watch and learn from me.

I think it’s still beneficial for you to learn from other sources. But the problem again is that you get sucked into them too much. That is happening when you’re new and manipulated.

It’s what happens when kids are young, and they get taken advantage of. It's easy to get manipulated because we’re young, we don’t know and understand. This is how sometimes there’s a lot of problems with kidnapping and things like that, where kids get sucked into a car with strangers. All of that happens because they don’t know better; they weren’t taught better. Or they weren’t taught that at the time.

You will be manipulated by media

This is what is going to happen, as you start looking at mediums like StockTwits, Twitter, YouTube, all the different channels. You’ll get sucked into different theories and concepts. And in part that’s good because you’re going to learn and evolve to some levels.  You’ll gain new knowledge and insight, and this is what’s going to shape you as a trader.

But once you get to a certain point, and I can’t’ really tell you exactly where that point is, you’re going to have to make that determination. You will reach a level to where you understand the basics of trading, the base concepts, or figure out somebody that you can relate with. You need to stick to that one or two or three people, or those one or two or three companies that focus on teaching you. Because if you don’t, you’ll get a lot of influence happening from other sources.

What I want to do is take a look at just Stock Twits and how things are going along with social media. By the way, if you want to connect with me on social media, go ahead. I use Stock Twits to do a lot of the postings, connect with me on critical charts on Twitter (that is probably the best for a live event) and then YouTube. Of course, if you’re doing something a little more, comment on the video.
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I do not hang out on Stock Twits because they don’t have a panel. Typically I go ahead and post out and connect to people on the outwards side, meaning I post into Stock Twits and Twitter. But I don’t interact, I won’t go out of my way socially, in the sense of let me go and socialize and chat with people on the network.

For example, all these people that are chatting here on Stock Twits, I don’t go out and start commenting and interacting with people. I don’t have the time for that personally.

But if you’d like to ask me questions go ahead and ask me a question. Twitter is excellent. Youtube is great; you can send me an email if it’s a more detailed question. I’ll be happy to get into that and answer them.

When people ask me questions on Twitter, it just shows up right here, and I’ll go ahead, and make a quick reply, and I’m done. It’s all right here on a dashboard. But with stock twits, they don’t have a dashboard integration, so I can’t do that.

Social media and trading

In either case, let’s take a look at some of these influences and how this works within trading.
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Here I’m looking at the spy, which is a very heavily fed network. When you talk about news or comments and so forth, and as we start looking through the spiders, you’ll notice that there’s a lot of people that mention what they’re doing. They share what they’re acting like, behaving, and their thoughts on the market. There’s a lot of input of information; it’s just constant feed and a steady stream when you look at it.

As you keep scrolling through, you’ll see some people post some charts. You’ll see some people post that they’re bearish. And this also correlates to how the market is moving, because you’ll even notice people here talking about buying the dip. Other people saying the spy’s rolling over, but if you went down when the market was acting differently, you'd see other people read the health of the market — this person’s bullish.
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You don’t know how others are positioned

And it comes down to everyone’s different opinion. Their view on the market, their stance, where they’re positioned. But the problem with this is you never really know where a person is positioned or how they’re positioned.

They don’t tell you that I typically position for two to four weeks or three to six months. That’s my outlook, and that’s why I’m bearish or bullish.

You can, in theory, go into, like here, buy the dip free money. You can go ahead and click something and see their professional equities, position trader, but that doesn’t mean they’re an expert.
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Sometimes what you might notice is certain traders, you’ll see that here, this guy is bullish here at 10-11 am. And when you look at the overall market, if you look at the S&P, you can see that here on the daily, we’re heading a little bit lower. If you look at the S&P, we’re down about six points, and this guy is bullish.
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I also look at this: they joined Stock Twits in 2016, ok does that mean anything? Yes and no, again, this is something they can fill out themselves. So whether you choose to listen to them or not, it’s totally up to you, it comes down to your personal preference.
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I registered a while ago on this Stock Twits actually in 2011. That's probably one of the early people here, so it’s been quite a handful of years. But I don’t interact as much, so you can see I don’t have a lot of followers here on Stock Twits. I don’t share a lot of ideas.

I’ll post some more key and essential concepts, rather than socializing. You’ll have to remember that this is a social network, so when you start seeing all this feed, all this news, in the end, you have to determine what is important or critical for you.

Determine what your plan is

You can look at individual stocks. This is the place where people are talking about stock specific items.  They're talking about what they’re doing, but you have to determine what your plan is. Because this person’s plan, or that person’s plan, is going to be completely different than yours.

Their risk strategy, their account size is going to be different than your account size. You have to hone in at your approach, and although this may give you some insight on what’s going on and what’s happening on the market and what people are thinking, typically the majority of traders are wrong. It’s funny to do the opposite of what many people say if you start looking at some of these streams.

You need to create a plan for yourself before you’re getting into trading the markets and trading these kinds of markets. All this information is going to confuse you. You’ll get some charts, but many of the times, when people are doing a lot of live interaction like this on social media, a lot of it has to do with more day trading, and that’s one of the differences.
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I’ll show you an example here shortly, just some people that interact with me, and show you why they look at what they look at. They don’t know me personally, and they don’t understand what my trading plan is.  So they assume that I am incorrect or wrong; they also assume different things.

It’s very tough to get a genuine connection with someone on social media. If you’re trading this way, my big warning is that you want to have your plan in mind before you’re looking at these streams.

Social media can be helpful at the beginning

Stop looking at social media if you’re already aiming to trade and starting. Because it’s only going to confuse you. If you’re brand new, you don’t know about defining terms; if you’re less than a month into it, social media is an excellent way to start looking at articles. It's a great way of discovering websites. People might point out things and charts, and it might allow you to see new ways of drawing things on charts.

But after that point, if you’re trading and you’ve been trading and studying the markets for two months to 2 to 3 years, you probably want to stay away from social media. It’s only going to confuse you, at least for these types of social media. Once you have your edge, core your system and strategies, then, by all means, interact.

If you’re asking questions in here, the appropriate way I would say is, go ahead and ask a question, why are you bullish? Why are you bearish? Why are you making the decisions that you are making? Where are you taking profits?

And the problem with that is you have to get in an interview with almost every trader to see how they relate to you. That’s very time consuming because other people will say, no point even trading, it’s such a total joke. The longer it stays here, the higher the odds we’re going to get a massive breakout to new highs.
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Don’t be scared to ask questions

There’s a lot of confusion that happens; some people won’t even trade these types of markets because it’s not for them. Other people do fine. It comes down specifically to you and your trading style.

That’s my warning to you. If you’re just in the first month, you’re okay in social media because you’re getting there. But after that, if you’re using social media, you want to ask a lot of questions, don’t be scared to ask questions. Questions like - Why are you doing this? Why are you thinking this way?

And some people may just put a stop. They might hate your questions, like, why are you asking so many questions? But that’s how you learn. That’s the way if you want to get better.

That’s one of the things that you have to keep in mind with social media, is that their outlook is different. For me, when I use social media, it’s to interact with other people.

I’ll show you another thing that happened this last week. Again we’ll use Michael Perry, because he’s interacting with me, and I’m sure he’s going to be okay with me using some of the things that we talked about.

Here we talked about Apple. This is public on Twitter so you can follow this conversation on Twitter. I’ve talked about this Apple trade right here, and you can review this.
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The summary behind it is that when I twitted this out, talking about apple here, let me see where it is.

Here’s what I talked about the apple trade, was May 26th, right around 3:40. We zapped those right in here, so it’s not really that I’m conversing with people in stock twits. It’s that it gets posted right away into Stock Twits. I mention I may attempt to fill the gap at 103.90 and then roll over, still popping on weak volume. Don’t by the hype.
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And that was my thought on May 26th 3:40. So if you look at the chart on Apple and we take this Apple chart here, you can see here’s the day on May 25th, here’s May 26th, and you can see that right after May 26th, we start rolling over. Right there and this stock already had this pullback of almost $4, and we’re continuing lower right now as I look at it.
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People see things differently

My point here is not to talk about myself. My point is to show you how people see things differently.

So for me, the reason why I said this, again, those of you that have been following me for a while know I look at the bigger picture, It’s not about pennies for me.

When I start looking at the bigger picture here on the weekly, I know that the ABCD pattern has completed, so I already saw this, we’re already overbought in the apple trade way up here, we can have a pullback to this swing level and then bounce, and what do we do? We broke it multiple times; then the next swing point is right here, if we break this level, this is the level I’m watching, if you break that level, you could see trouble.
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That’s why I’m seeing weakness coming into that stock, every time we get a bounce, we get lower highs in the stock, and that’s why I say we get weakness.

The other thing I’m watching is I’m looking at these swing points, so if you know Fibonacci sequences and you took the green course, when we draw this fib level, and we zoom in, you know that what do I always say?

On a retracement, we can go 50%, no problem, and then continue on the trend, so right here we had a bounce of 50% and now what are we doing?
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You can see, every time we’re making these bounces, we get a further rollover, we get a rebound, we get a rollover. What do you think is going to happen?

That’s the standard, healthy pattern of the stock, is to continue there, and now, can it change? Yeah, it can change, but this is to show you where my theory and concept was based on.
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We can still fill the gap and then roll over. But right now, it didn’t even get a chance to get fill the full difference, and I posted this here on May 26th, and said, we’ll probably fill the gap, or we got to the $100 mark, and we roll over.

When we look at this on twitter, you can see that right there on Twitter; it may attempt to fill the gap at $103.9 and then roll over, still popping on weak volume.

Again, a lot of information in there, why do I say weak volume? This move, some people may consider it strong volume, other people may consider it weak volume, why do I say weak volume?
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Well, when I compare it to the previous volume, I look at it, and from experience I see that it’s weak, some of the key things that allow me to spot this as weak, let’s just go to the weekly, and I can see that this bar right here is 349.2 million on the weekly, 349 million, think about that.
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If you put this in candy perspective, or 349 million dollars, this is the number of shares traded, but think about it, 349 million to the downside, and here we’re trying to pop on 204 million, the difference here is an extra 150 million.

150 million more people on the downside, not people, shares, of course, I’m just saying people as a relative concept, visually. It’s tough to imagine a share of stock, but if you look at people lined up, and an extra 150 million people lined up, that’s a big difference. And that now starts to visualize things a bit different. So you can see that’s why I look at this.

Social media is there to interact

But when you look at social media concepts here, as we start getting into the inbox. This is not to criticize the people that post and interact on social media. Because it’s there to socialize, it’s there to learn, so that’s perfectly ok. Understand that they see things differently, they’re looking at different things than what I look at, so that’s perfectly fine.

There’s no need for me to continue the interaction because I already know that I know. I understand what I’m doing.

For me to explain to everyone what I’m doing here on social media, it would just take up so much time. There’s not enough time, so here, when you look at it here, right after I posted this tweet. Yeah, let’s not ignore the 5 and 7.5 million blocks that were bought at 99.16, and then a huge ensued.
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Here, the 5 and 7.5 million blocks that were bought at 99.16 and if you look at it, really this person is talking about day trading because when we look at it on a daily chart, you can see that here we’re already talking about 38 million, 35 million per day.

When we zoom in here on the 30 minutes, we go to the 26th, and here’s the 6.2 million that they’re talking. Maybe if we go to the hourly here, they’re talking about 9.3 million. I would imagine this is the block of volume they’re talking about.
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This is the fake out. I know the bigger picture, remember, we’ve already looked at the bigger picture of this stock. So what happens to the stock? We get exhaustion, and then we roll over, and now we’re continuing to roll. Now, look at this inflow that’s coming in of volume into this sock. It’s because of the other previous overhead supply.

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I’m not looking for pennies

This person was looking at it, strictly from a day trading perspective, because when you look at it daily, we’re averaging 30 million, 50 million, 35 million, 38 million. When we look at it here on the Stock Twits, let’s not ignore the 5 and 7.5 million blocks, I already know and understand, right away in my mind if he’s talking about 5 million and 7.5 million blocks. I know he’s a day trader.

Right away I know they’re looking right there at the day trading. And for me, I’m not looking for pennies, that’s not the game.

And when you look at it, you zoom in here at the 99.16. He’s talking about, that’s all right there, you can review it, it’s the charts. There’s no need for me to criticize, to comment about it, that’s just the way they think, and it’s not my thinking.

My goal for you in this lesson is to understand that other people think differently than what you’re thinking. Stop letting them influence you.

Next comment regarding this, again, not buying it here, but over 50 million shares traded is not what I would consider weak volume. He mentions not what I would feel weak amount.
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For him, and I don’t know how long he’s been trading, he’s intermediate, so maybe he has some skillsets behind him. I don’t know, but 50 million is not what I would consider weak.

Look at the bigger picture

Let’s look at these 50 million. We’re on the daily here, he’s talking about this massive bar right here, which is over the average. Our average here at this point is 44 million, 44.5 million, and we’re averaging 56.
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To him, that’s massive volume. But to me, when I look at the previous chart here, this last chart on the daily, what’s over ahead, what’s above that price, what’s pushing down, think of this as Shaquille O’Neal pushing down on you, what’s above it?

He’s pushing 114 pounds of pressure, 114.6 million shares traded to the downside, whereas here, you have 56 million pushing up.
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Think about it, 114 million pounds, or 114 pounds pushing down, and you only have 56 pounds of pressure pushing up, which one’s going to win?

You have to think about it that way too. Going to the weekly, you see the bigger picture. And you look that on the weekly it’s barely hitting that average.

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I would assume he’s a swing trader, which is when you look at the profile, it says he’s more of a swing trader. But his swing trading is a little more, a tighter swing trader. Because in swing trading, you still have more of a day trading swing trader. You might have a multi-swing trading, multi-week or a monthly swing trading. So you still have different levels of swing trading, in terms of time.

Again, not to criticize this person or anything like that. It’s just merely he trades differently, and that’s perfectly ok. And he’s free there to make their own opinion. But my goal is to share with you that when you’re looking at this, a 50 million here that someone says and now you may get sucked in thinking, yeah, that’s huge he’s right.

If you trade precisely like him, and you’re doing exactly the way he is, and you’re cloning a replicate of that person, then yeah, you would see things the same way.

But for those of you that have studied with me, followed me, you understand that I look at the bigger picture. And there’s a reason for that. Because things can get a turn right under you. A rug can get pulled right from under you, and the bigger picture here, as you start looking at ideas, you start evaluating things, and as you see things more clearly.

Me and him, we’re not a clone, we’re not the same. I see it as this stock still has a weakness, so for me, would I instead go short or long this stock over the next week? I would instead short it.

If I look at it that way, over the next ten years, if I were to hold it, or hold it short for the next ten years, I’d probably instead go long. Because over time the value, you would assume the company grows. It’s all relative to time perspective.
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And looking at this first gentleman here, or this first person, we know he’s a day trader, based on his 5 and 7.5 million blocks. The other one is more of a shorter term swing trader.

Define yourself

You need to define for yourself, when you’re looking at charts, how things are relative to you? Are you more of a swing trader? Day trader? But then within that, are you holding positions for a little bit longer, a little bit shorter period, and then evaluate things.

I would recommend you look at things at a longer time perspective. This is the reason - A stock can go up for many, many years.
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Now, do you want to try to capture everything you can in 6.5 hours? And you want to make trades, and you want to pay more commissions. Maybe you want to be focused on the screen and sit on the screen?

Would you instead buy the right stocks, at the right time, allow them to run, and enjoy your time? You enjoy your time freedom, go on a trip, go on a vacation. Do what you want, go read, go to the pool, and take a walk. Or do you want to be glued to the screen?

Again, it’s up to you. It’s a different kind of personality, and there’s nothing wrong with either one of those. You need to understand how social media will impact your decisions, is that they are different; there’s a lot more real time things that happen here. If we get into all these different things, you get to see things happening. And people filling in their real-time ideas, but very few will share the longer term, bigger term view on the market.

It’s hard to dissect who’s doing what, unless you’re asking a lot of questions. So don’t be scared to ask a lot of questions. If you’re on social media, ask questions to understand the person.

Don’t follow too many people

If you’re following three to five people, I’d say that’s more than enough. If you’re brand new to trading, that’s an excellent way to get started and build your awareness. But if you’re actively trading, and you’re new, I would say you need to close this down. Follow one or two people at most, because otherwise, you’re going to get confused.

This is like trying to find the right grain of sand in the desert. It’s so difficult because you look at all these different traders with their ideas. You can end up scrolling for days.

There are so many ideas that you need to filter. I advise you to skim it from time to time.

If I look at it, in case somebody messages me, but other than that, I don’t even look at this. I merely will post my chart on the outgoing, and if some people reply and they like it, they don’t like it, then by all means, great.

When somebody has a question, I reply to them. So if you have questions, go ahead and reach out to me, you can do so on Twitter. Critical charts, this is also where I post a lot of the alerts or things like that, like for the new critical charts posted.
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I’ll also post some new goodies and things that happen. For example, this free book that we launched last week. Twenty rules for investing success, which we’ll be getting out that PDF, this week or next week. I have to see if we finish it up, and then we’ll send it out.
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Social media can confuse you

That’s the thing, if you’re watching Stock Twits or Twitter, follow one or two people, whoever they are. And see how they relate to your style. If you can connect to them, great, use it, make it your own, get better, and use it to continue to improve your trading. Then you can use that to upgrade your account and improve your life.

But it’s just a point or area to learn from, but it can be very detrimental if you don’t understand that there’s only so much information that can be confusing. Especially when you’re new. My advice is don’t get sucked into that, with information overload.

Be very, very, very careful, because there’s just so much out there. Be able to filter that and put on your blinders and hone in at the right things. That way you can continue to get better.

Those are my thoughts on social media. Just ask a lot of questions if you’re following someone to understand what they’re doing. That's crucial if you want to know where they’re getting their trade ideas, why they’re selecting the trades that they are.

People that you’re following maybe have a book or blog. Then go ahead and read that blog and get inside their head. Watch a few of their videos, because it allows you to connect on a deeper level and understand them even more. Because then you just get some insight into how their brain and mind thinks.

Author: Sasha Evdakov

Sasha is the creator of the Tradersfly and Rise2Learn. He focuses on high-level education speaking at events, writing books, and publishing video courses on business development, internet marketing, finance, and personal growth.

I'm Sasha, an educational entrepreneur and a stock trader. In addition to running my own online businesses, I also enjoy trading stocks and helping the individual investor understand the stock market. Let me share with you some techniques & concepts that I used over the last 10+ years to give you that edge in the market. Learn More

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