I got the idea for this post after watching twitterers on StockTwits take some trades based on the people they follow. Overall, there have been some GREAT calls made, but let's face it - no one is perfect. Yes, not even me ;-)
But I was amazed to see some people take trades based on a call made by a famous bottom=caller, who shall remain nameless, and then they started to tweet him things like: what's your stop on this, or what stocks are you short, etc. This prediction to short a certain sector was made in the morning. And as I type this post, the sector ETF is down about 5% from the open. I am sure this person (who has an EXCELLENT record BTW) has closed his position and gone the opposite direction, or stayed in cash.
My advice is this: if you are taking a trade based on someone you follow (including myself), please, please make sure it falls within YOUR strategy, trading plan, risk tolerance, etc. And even more importantly, use YOUR money management plan on the trade should it go against you. At the end of the day, this is your trading account and you are accountable to yourself and NOT the person you follow. In my case I am accountable to my beautiful wife.
So, please consider wisely whether or not you are comfortable with taking a trade based on StockTwits and above all, make sure it falls within your trading plan.
Good luck and have a great weekend.
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