September 21, 2012 12:09 am

Message boards: Investors turn to real-time, online chat to make informed choices

The stereotypical day trader is a young man, based at home, who regards company as an unwanted distraction from the business of outsmarting the market.

But mobile technology is changing this, and the providers of spread betting services are also starting to realise real-time, online trader interaction can be beneficial.

CMC Markets has launched chart message boards that will allow UK clients to discuss, share and swap charts and technical analysis via interactive message boards.

Chart message boards have been built into the trading platform for traders who may be watching or trading the same instrument.

Michael Hewson, senior market strategist at CMC Markets, says part of the boards’ appeal is that they let traders: “Either watch and learn from other postings on individual markets to begin with, or alternatively, once the confidence levels have grown, to actually get involved yourself and submit your own trading ideas.”

City Index also believes in giving traders a platform to share ideas and trading strategies. Its experts have more than 30,000 Twitter followers. Joshua Raymond, chief market strategist at City, says: “Our website allows clients to engage actively with our analysis of the markets by commenting and debating key trends or market insights with our own experts or other traders through user-generated content which appears directly on our site.”

Forex trading platform eToro says its users benefit from sharing the wisdom of the crowd to make investment decisions. Yoni Assia, eToro’s chief executive, says so-called “tribe leaders” are called “gurus” because of a combination of their actual and historical trading performance, and their ability to efficiently interactive with fellow “tribe” members.

While it is clear clients like to interact with one another it is not obvious if this is good for business. Simon Denham, head of Capital Spreads, says: “The problem with social trading is that it is very difficult to turn traffic into income.”

He adds that, from a management point of view, sites need to be constantly monitored for abuse. “It’s amazing how long a client with a grievance will continue to post. But if the boards have only sycophantic praise it tends to attract cynicism in equal measure.”

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