Traders Atwitter Over New Apps

(Note: My working title for this column was “Twittering Twaders,” but that didn’t make it to print.  Much to my dismay.)

QUITE A FEW BROKERAGE FIRMS ARE PUSHING THEIR OWN social-media applications in an effort to get new customers—and to keep current customers engaged.

TradeKing (http://www.tradeking.com) and Zecco (http://www.zecco.com) have integrated electronic conversations between customers into their trading platforms, and Charles Schwab now allows its high-asset clients to talk among themselves. But several firms now offer customer service—and customer-to-customer communication—via San Francisco-based Twitter (http://www.twitter.com), the ubiquitous service that lets anyone broadcast messages ("tweets") of up to 140 characters over the Web and via registered cellphones.

Twitter co-founder Biz Stone, appearing on Comedy Central’s The Colbert Report this month, said that the service started as a side project. “It’s the messaging service we didn’t know we needed—until we had it,” Stone told host Stephen Colbert. The outside world first got to Twitter in 2007. Twitter is free now, but won’t be forever.

AS IT TURNS OUT, FREQUENT TRADERS are engaging more and more with one another by using Twitter in various ways. The benefits of Twittering run from gossip-sharing and info-sharing among customers to on-the-spot guidance from the brokers’ customer-support Twitterers. The service can provide information on bargains, too. Scottrade customers, for example, got a tweet about a 30% discount on TurboTax.

As new as the Twitter phenomenon is, there are already conventions focused on Twittering about trading. For Twitters on stocks and options, you place a dollar sign in front of the ticker symbol. You can then filter the Twitter feed to display only entries with dollar signs in them, or specific tickers you want to follow.

The newest broker on the block, tradeMonster (http://www.trademonster.com), decided to implement a Twitter integration rather than launch its own social-networking site just for its customers. Smart move. The customer base at tradeMonster isn’t very large right now, as the site just launched last fall—but having a presence on a very popular medium gets the name out there for others to see.

TradeMonster customers, as well as those who have signed up for a tradeMonster “paper trading” account—a trading simulator—can quickly tweet a stock or option they are following. The Twitter integration places a small lowercase “t” that resembles the Twitter logo in quote, chart, and position displays within the platform on your personal computer. To tweet what you are looking at right now, you just point your mouse at the “t” and click on it.

A Twitter window displays the price of the item you are looking at—say, Goldman Sachs stock, or an option position—or even a multi-leg position that you are considering trading. You can edit the generated tweet, or add to it, up to the 140-character limit.

It is clear that, when the chatter around a certain trade is significant, this form of communication can add significantly to price pressure.

Skip Shean, vice president of marketing and business development at tradeMonster, said the firm decided to implement a Twitter integration—rather than build a social-networking platform that only its customers could access—in order to generate responses quickly. “We decided to go where the audience already is, rather than trying to draw it off of there and bring it to our house,” says Shean.

Especially for a new firm, I think, that is a good call.

Speed of response is particularly important to an online trader. A private network might give you interesting replies, because they will come from (by definition) members of your own network. But the replies might be slow and shallow if the community is small.

TradeMonster’s Twitter integration provides its customers with a wider discussion arena, and also shows off the firm’s offerings to the huge Twitter audience.

Getting started on Twitter is easy; the hard part is keeping up with the huge number of messages posted. The challenge is to filter out the junk (Is it really important to know what celebrity Ashton Kutcher is doing right now?) and find something interesting.

ONE SERVICE THAT IS AIMED RIGHT at traders is StockTwits (http://www.stocktwits.com), which lets you enter tickers on the “Portfolio” page, and thus filter the incessant stream of incoming posts.

There are quite a few other Twitter-filtering programs out there. My two current favorites are TweetDeck (http://www.tweetdeck.com, obtainable by downloading and installing a small application) and Twitterfall (http://www.twitterfall.com), which runs on a Web browser.

TweetDeck organizes the tweets into columns, so it is easier for you to see responses sent directly to your user name, or to filter a variety of topics and have those posts show up in separate places. If you really are interested in hearing everything Ashton Kutcher has to say, you can put his tweets in a column separate from those that pertain to your investments.

Twitterfall also has a powerful filtering engine; the tweets drop onto your screen as small illustrated boxes. You can control the flow of the posts; those that meet your criteria are queued up and displayed at an interval that you set. I have Twitterfall set up to show me messages aimed at customer-support representatives of various online brokers. Scottrade, tradeMonster, Fidelity and several others have customer-support reps who are Twittering away all day.

While interviewing Biz Stone, Stephen Colbert uttered and Twittered this investing tip: “Note to self: Send robot to past to invent Twitter before this guy.”

Great idea, but tough to put into action. By the way, my Twitter address is twitter.com/twcarey.

Posted by on 04/25 at 03:37 AM

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