Learning from stock trading forums is a good practice for traders. What are stock trading forums? These are websites that allow investors, traders and anyone interested in the investment world, to share information, knowledge, tips, etc. with people having similar interests.
We are not suggesting that one should make investing or trading decisions based on what is being discussed at these forums. But once an analysis is complete and one is about to make a trade, it does not hurt to check and see what the investing community is saying about the stock pick. It allows one to have an ear to the ground and acknowledge that, despite all the hard work in the analysis that has gone in, there is still a chance that everything is not known about the company.
In rare instances, it can actually drive some trading activity as well. Now, we do not recommend this all the time. But some activities can give you hidden signals and then it is up-to you to take the necessary action. In some cases, you could be rewarded handsomely purely by reading up on the forums and taking action based on that.
Stock trading forums also give a good indication of which stocks are being talked about. You hear so many good stories about companies that have great balance sheets, strong revenues and profits and yet, their stock price is languishing. That is because they are unknown stocks. They are not being talked about. They have not generated the kind of interest that is required to be generated within the investing community. These companies need to seriously revamp their investor relations department or their PR departments as clearly these departments are non-functional within these companies. Whereas, you may have a stock that has good financial fundamentals but is also trading at a steep premium. And still there is a lot of interest in the stock. One reason for this is the chatter in the stock trading forums. There is a certain level of herd mentality that a trader cannot ignore. As they say, sometimes it is good to go with the flow.
So, what is our advice? Do a search for the best stock trading forums, bookmark them and go there often. Consider it as homework. And definitely go there before making a trade.