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July 27, 2006

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How Traders Can Utilize Web Logs (Blogs)

Name: Jim Wyckoff

Company: TradingEducation.com

Learn More About Today's Author
Years Trading: Over 20

Favorite Movie: The Outlaw Josey Wales

How Traders Can Utilize Web Logs (Blogs)

Web logs or "blogs" have become all the rage on the Internet during the last couple of years. Movie stars, politicians, pundits, journalists and everyday folks are creating blogs. So it is no surprise that traders and analysts are now using blogs to communicate with their customers more effectively.

A blog is nothing more than an on-line journal created by an individual (called a "blogger") – a diary of one person’s market thoughts or a collection of a variety of items that the blogger thinks are relevant. A blog is usually updated frequently, sometimes several times a day. Whereas a web site like www.TradingEducation.com provides primarily one-way communication from the originator to a viewer, a blog not only presents the blogger’s personal expressions but also gives readers an opportunity to respond.

In the past there were news groups, chat rooms, personal home pages and, of course, the ubiquitous e-mail messages that have become a primary means of communication in the corporate world. In an age of MySpace.com, instant messaging and Blackberries, it was only a matter of time before traders and analysts adopted blogs as the newest method of getting key information to their clients as quickly and efficiently as possible.

For perspective, when I broke into the futures industry more than 20 years ago, the Internet was not available to the public, and the word "blog" would likely have been considered just a misspelling of the star monster in a grade B horror flick: The Blob. The fastest form of news/analysis dissemination back then was via a news wire service, whose customers had a hard-copy printer or teletype that received information via satellite transmission or telephone line. Although that was seemingly rapid communication 20 years ago, it cannot compare with the speed at which Internet and blog information travels around the globe today. This is very good news for the individual trader.

In fact, a veteran futures trader told me 20 years ago that market-moving information flowed right from the trading pits, from "in-the-know" traders, out to the general investing public. Nowadays, with the rapid rate of information dissemination via the Internet, market-moving news flows from computer screens into the trading pits – for those markets still traded via open-outcry.

Indeed, the Internet has leveled the playing field for the individual trader seeking market information and analysis, and blogs have only made the flow of important market information and analysis even faster and more effective for individual traders. And traders know that "time is money" in this business.

In addition to the extreme timeliness that blogs provide to individual traders, they also allow the blogger to expound and provide key perspective and opinion on events that are impacting markets. In fact, a number of bloggers use pen names and remain anonymous, allowing analysts who are public figures to share personal thoughts or feelings about the market without the name attribution. This allows them to be more blunt and frank about their real market feelings. One such example is www.MysteryTraderBlog.com, whose author’s trading credibility is well-established but who prefers to keep his identity secret as he reveals his insights.

Veteran traders know the importance of what analysts are "thinking" about market price action. This is a common comment from an experienced trader: "I already know the statistics in the markets. But what I really need to know are the opinions of the market experts." This is the beauty of blogs, as they allow the expert trader/analyst the perfect platform to provide their analysis and opinions . . . and in a very timely manner.

Some estimates put the total number of blogs at more than 50 million with virtually every trading subject covered by a blog somewhere. The challenge is to find a blog that suits you among the many available. Perhaps the best way to discover a blog that provides the best information for you is to go to a site that has a directory of blogs such as www.TraderBlogs.com.

Many of the features to look for in a good trading blog are the same things you want in a good web site:

Timely information updated constantly. Just as with a good web site, an effective blog should have current, fresh content that brings readers back every day. It may be the latest market view from experts with a long trading background such as Dick Diamond offers at www.IndexTraderBlog.com or Nothing will kill interest in a blog more quickly than stale news or data that is updated only occasionally.

Fresh, distinctive views. Print and broadcast media offer the standard line of thinking that is widely disseminated and well known to traders. Blogs provide an opportunity for bloggers to present unique opinions or conclusions that may not be in the mainstream of market thinking. These comments do not necessarily have to be off the wall or illogical but give bloggers a chance to express ideas that may be new to traders and make them think beyond conclusions that may be obvious. If the blogger’s comments draw a response, so much the better for becoming a distinctive, must-check site.

Personalized style. Not every comment or opinion has to be witty or pithy, but it helps if a blog has clever commentary mixed with humor or personal observations. The best blogs have short, insightful, interesting items and will be judged on the quality of their content, not the quantity. You may see some of the same information elsewhere, but a blog that draws traders is one that has some twists – some distinct characteristics that make it different than the standard means of communication such as the commentary about market psychology from an international leader among professional trading coaches, Van Tharp, at www.SmartTraderBlog.com. The more traders a blog attracts, the more likely it will elicit reactions that can help to educate the community of traders, including the blogger, which is the purpose of a blog and what makes blogs so useful and valuable to traders.

About Today's Author

 

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