By Chad Smith, Chief Marketing Officer, Moomoo Technologies
There have been online forums around for decades that brought together like-minded individual investors to participate in peer-led discussions about the stock of the day. In the last few years, the retail trading platforms have seen the merits of creating similar such opportunity for their users. But it’s precisely there that the similarities end.
The retail trading platforms know that the discussions they host can lead to someone making an investment decision. What is said, how, and why on their platforms have real life, or rather real pocketbook, consequences. The overall quality of the interactions, against the backdrop of the investing tools the platforms provide, also makes this service one of the main reasons an investor opens a trading account and often encourages others to do the same. Even though they are becoming increasingly important, retail trading platform communities are still only forums for investors to exchange information and ideas. While they may impact investment decisions, the forum is not an advisor or a fiduciary.
Still, there is a specific burden on trading platforms: the goal is not just to provide a virtual space for a useful exchange of ideas and opinions but also to create a sense of community, and one glued together by mutual trust. Added to that burden: it can’t be the “community” that exists today on Facebook and X, which have become sources of disinformation and consequently polarized their users. The retail trading platforms know this and realize that their communities have to engage constructively and the social networking needs to be practical and effective.
That’s exactly what’s being achieved in large part because the networking has a single focus – investing. The ongoing success of these online communities, though, means achieving three goals:
First, facilitate conversations that grow and bring communities together and, over time, keep people engaged;
Second, maintain responsibility over conversations that occur without having to impose mass censorship;
Third, ensure that conversations are aligned with the reasons people joined the community in the first place.
Achieving those goals also means remaining singularly focused on and avoiding the polarization that’s dominated the major social networks. Here are some the best practices for growing community on the trading platforms.
Being “social” on retail trading platforms has specific needs.
The nature of information provided by and sought out within a retail investing community is complex and multi-faceted. Investors use and partly rely on the community to reach conclusions, not to simply access a wealth of information. Conclusions are not “googleable” when it comes to finance and investing. People often don’t have time to read every bit of news, so it is helpful to connect with the community of like-minded investors. They are looking for more than facts and the retail trading platforms have provided a place to do just that.
A good community is an engaged community. That means it is supportive and users provide information that is wanted. A credible community looks for information at its source. Getting too far from the source can further misinformation. A good and credible community is a source of truth – and that means based on facts that can be verified and opinions that are credible. Communities that deliver credibility can create a climate of trust.
The retail trading platforms know how high the bar is.
There are many investment-oriented forums that don’t have affiliation with trading platforms. Over the past few years, those platforms have actively worked to facilitate and bring those conversations under their umbrella. However, the trading platforms have a higher bar for earning and maintaining trust with their communities, partly because they know the conversations also enable trading decisions.
The bar sets even higher when a community is affiliated with a trading platform because, in addition to being subject to a range of Federal and state consumer protection laws, investment-oriented communities may be subject to securities laws and rules and regulations. Investing forums and social media networks are not.
The SEC’s Office of Investor Education and Advocacy has continuously issued warnings to investors about scams that occur on social media platforms and apps. Fraudsters disseminate false information and sometimes pretend to be someone else. That’s far more difficult for communities that are in trading platforms because, in order to open an account, personal information has to be provided. Regardless, before making any investment decisions, it is important to verify any information and ensure that investors are making an appropriate decision given their individual circumstances.
Keep engagement constructive.
One challenge that both trading and social platforms share is maintaining respectful interactions without censorship. For their part, the trading platforms have made significant efforts to read and interpret language within a context, understand who the language is directed at and encourage platform participants to report offensive, misleading or irrelevant conversations by community members.
Algorithms look for certain keywords, which can make it easier to identify offensive interactions. The trading platforms also encourage reporting. Where the complexity comes in is where the trading platform has an international community. What is acceptable in one country may not be acceptable in another.
What does the future hold?
There are two types of people: people who only trust other people, and people who trust other people and technology. People want different things, some welcome automation and algorithms that help with that, while others want to engage and only seldomly use technology to make a decision. A good community has a place for both.
Any community, whether it’s hosted on an investment or a social media platform, needs to be cared for; it cannot just operate on its own. Participants, as much as its hosts, have ethical responsibilities over the conversations they facilitate and in which they participate. That is both the beauty of having an online community and one of the biggest responsibilities.
