The Twitter Question

There is a lot of speculation amongst the most popular stocks. Twitter is just one example of this. It’s a newly offered stock, in a hot sector (technology), and it has seen a lot of trading volume over the last few weeks. So what should you do with it? Should you buy into the hype, short it, or just stay away from it?

Let’s start with the facts. There is much agreement that Twitter is highly overvalued. In theory, this means that prices should come down soon. For short term traders, though, it’s not quite that easy–especially if you are day trading the stock or trading binary options. When you’re trading in these fast paced markets, you want the asset to be moving quickly, too.

A day trader in the stock market is not content if their asset of choice moves 0.1 percent over the course of several hours. Unless a large amount of money was being traded, this would usually be either a loss, or only a marginal profit–definitely not worth the effort in most cases.

With binary options, this would be a profit if your prediction was correct. But that doesn’t mean that it’s a good trade. It really depends on the timeframe you were aiming for and what you expected out of it. A movement of 0.1 percent would be very helpful for you if you were looking at 60 second options and would ensure you that you were on the right track with your trades. This is a large amount of movement in such a short time. But if you were focusing on a week long option, you probably just got lucky. It worked out okay in this instance since binary profits give you the full reward for a correct guess no matter how right you really are. However, it will be useful for later on when evaluating what you can improve upon. If you know that you just barely made a profit, then you can review your criteria for selecting trades and improve upon it.

So how does this all relate to Twitter? Many experts agree that the stock is going to go down in value, but no one is really sure when this will happen. And until it really does begin, it looks like nothing significant is happening with it.

This is an advantage that binary traders have over others. It is very easy for them to hop into the middle of a trend or even near the tail of it, and still make a significant profit. Rather than trying to predict exactly when something like this is going to happen and jump on right before it starts, you can wait until it actually does start and not lose out on a big amount of money because of your delay. This is why short term binaries have become so popular over the last year. They allow you to take a big profit out of a very small chunk of an asset’s movement. This is probably something that would work well with Twitter for those of us who remain skeptical about what it’s doing. All new offerings have growing pains, and Twitter has not avoided them. The best course of action for traders is to wait until they have evidence of what is actually happening with the stock. Conjecture can be right, but more often it’s wrong and you will lose your money more often than you will profit. If you are unsure, stay out of the marketplace. Depending upon how you trade, it’s never too late to jump in and grab a position.