How social media is analyzed to predict market trends, according to Maksim Konstantinov
The reach and power of social media has grown swiftly in the last decade or so. The best asset of social media is its speed. Immediately after typing out a post or publishing a tweet, anyone can circulate a message to a potential audience of millions or even billions. This ability has been handy for breaking news events from journalists and news outlets. The effect has been especially felt by trading markets, where the response to major events can be prompt.
The daily deluge of social media posts can stir the markets and could be a goldmine for financial analysts looking to attain the sentiment and mood surrounding countries, sectors, and companies, shares Maksim Konstantinov.
The 30-year-old Russian native firmly believes this present-day highly connected world, driven by instant communication and data, has molded trading significantly of late. He says there’s no reason to think that this fast-paced world will stand still either. The financial markets move with time, and thus, as technology progresses, continue to expect this world to be at the forefront of change.
As someone who has been offering vital financial services like investment portfolio building, financial audits, and financial management, Konstantinov shares the financial sector, just like most other industries, communicates by sharing data and information through the internet and via social media. He further explains, when people interact on social media, it creates emotional data by expressing their opinions, feedbacks, and views via tweets, stories, blogs, and forum posts. At the same time, they also consume it, and in due process, get influenced by the feelings, sentiments, and thoughts presented by others. This emotional data is mined from social media platforms, which is later utilized to scrutinize the market. Hence, the deep study of social media and other alternative data sources has become increasingly critical, adds Konstantinov.
Having been studying statistical patterns of the financial markets, Konstantinov firmly states, “Powerful personalities or brands carry higher chances of creating an impact. For instance, Warren Buffet, Elon Musk, Bill Gates, and the Bloomberg News Agency fall under this category because their posts and tweets can transform the markets more noticeably than the posts of lesser-known users.
Such people, along with CEOs of listed companies, journalists, analysts, politicians, and news agencies, potentially leave a greater effect on the movement of stock prices. As beneficial as it may seem to the world, major events and the impact they have left on the capital markets indicate the significance and dangers of social media. Thus, it’s essential to scrutinize and verify every piece of information and its source.”
By analyzing and monitoring data from social media sources, especially communication about stocks, it’s possible to connect the dots between sentiments and financial market movements.