Trading With TikTok
With its targeted algorithm and visual interface, trading on TikTok has become popular among investors looking for bite-size market insights and trading tips. However, relying on such apps for trading is risky and unnecessary, given the availability of trusted sources of information elsewhere. In this guide, we explain how to use TikTok for trading, as well as the drawbacks and alternatives.
Trading with TikTok is high-risk due to the dangers of misleading and false content.
Instead, consider brokers with social trading and education:
Best Social Trading Apps
What Is TikTok?
TikTok is a video-sharing social media app that allows users to create, share and watch short-form videos on any topic.
The app is largely mobile-based and is known for its use of filters, voiceovers, stickers, sound effects and background music. Content can be anything from comedy sketches and educational tutorials to investing tips.
TikTok’s predecessor, Musical.ly, was founded in 2014 and was originally focused on lip-syncing content. In 2018, the brand was acquired by Chinese developer, ByteDance, and re-branded to TikTok.
TikTok surpasses 1 billion active users each month, making it one of the fastest-growing social media platforms in the world. The reasons for this global evolution include its ability to launch viral trends, its ease of use when creating content and its celebrity endorsements.
TikTok has also been criticised for its privacy practices, the censoring of content, and its highly addictive algorithm which is thought to be harmful to the younger generation. With that said, the video-sharing app continues to attract a range of audiences and demographics, including aspiring traders and investors.
How To Trade With TikTok
TikTok could arguably be useful, to some degree, for gauging market sentiment, presenting breaking news and sharing trading tips.
With that said, traders should approach anything they ‘learn’ on TikTok with caution. As with any social media platform, fake news, misinformation and bias is common practice among individuals who claim to be professionals.
The main ways that traders could take advantage of the app are:
Video Search
You can search for videos on any investing topic using the search icon on the home screen.
For example, a search of TradingTips in the search bar presents all videos that include the hashtag topic, #TradingTips, in its caption, with the most popular videos at the top.
From the search feed, you can also browse all videos, users and hashtags related to your original search from the top menu.
The main advantage of using the search tool is that you can narrow your search to more specific topics, such as ‘stockmarketnews’ or ‘daytradingforbeginners’.
However, most of the creators publishing content around these topics are amateur traders who claim to be ‘experts’.
These users often create TikTok content to generate their own income stream through ads for their products. Crucially, there are limited ways of proving that their trading methods or knowledge are viable for everyone.
Live Videos
Another tool that traders could leverage is the LIVE feature, where creators can set up a live stream allowing users to interact with them in real-time.
Users can watch other people live trading on their own platforms and observe how strategies are executed in real life.
One way to take advantage of this feature is to follow popular day trading accounts that do live streams regularly and enable push notifications. This means you will be alerted in real-time when they set up a live trading stream.
Again, traders should be aware of following any ‘best’ trading advice or tips from amateur investors online. Even if the strategy they have used in their live feed appears to be successful, there is no guarantee that the same will happen for you.
Personal Feed
Your personal feed of videos plays from the home page when you open the app. The highly personalized algorithm sorts the video feed by popularity but also considers your interests (based on previous videos that you have watched) who you follow, and what is trending.
Thus, by engaging more with trading-related content, you continue to feed the algorithm that pushes you to the same content.
Popular TikTok Trading Accounts
There is some mildly valuable information on TikTok, with some channels specializing in a range of condensed topics suited to different experience levels.
For example, some beginners turn to TikTok channels to learn about the basics of forex trading in a fun and visual way. Some more experienced traders may refer to news channels for market announcements and updates.
If following any accounts, always be vigilant of any misleading information and sense-check any facts by referring to reputable sources.
- @HumphreyTalks – With 3.3 million followers, Humphrey Yang’s account is one of the most popular on TikTok for personal finance topics. His videos cover everything from understanding taxes to short-selling stocks. He also has a YouTube channel offering trading tutorials.
- @Tik.Stocks – Professional stock analyst, Robert Ross, shares trading tips and investment advice for choosing and analyzing stocks. He is also active on Instagram.
- @herfirst100k – This account run by Tori Dunlap focuses on taboo financial topics for her 2.3 million followers, as well as advocating for financial opportunities for women.
- @cryptomasun – With 1.2 million followers, this account provides daily cryptocurrency content, from top trending coins to market insights.
- @ange83 – This account owned by ‘TradingFace’ has 2.1 million followers and focuses on chart strategies for forex, cryptos and stocks. They also sell two trading books.
You can also follow general business and financial market accounts if you’re looking for official condensed market news and insights. These include @businessinsider, @bloombergbusiness, @YahooFinance and @TradingView.
Pros Of Trading With TikTok
- Trading on TikTok today can provide some market insights and news analysis through condensed short-form content
- TikTok offers bite-sized visual content which may help beginners understand the financial markets
- There is a vast library of searchable topics and trends that traders can tap into
- Using TikTok for trading is free
Cons Of Trading With TikTok
- Misinformation and bias: TikTok is fundamentally a social video-sharing app, not an educational platform. Individual users are normally amateurs who may create content that is false or biased, often profiting from ads and subscriptions to their own products.
- Lack of credibility: There are limited ways of proving the credibility of creators on TikTok. Since it is not an official research platform, there are no sources to verify, and insights may not be evidence-based. A creator’s ‘knowledge’ could be based purely on personal experience and hearsay.
- Limitations of condensed content: Short-form video content cannot give you the full picture of the financial markets or investing strategies. They are snippets of a vast market that take many professional traders years to learn.
- Not real-time: Content is not always as reflective of current events as official news outlets. Reputable business and financial news channels such as Bloomberg, Reuters and Yahoo Finance receive information and events first-hand and deliver them to readers in full detail.
Alternatives To Trading On TikTok
For the most reliable sources of information for trading, we recommend using a reputable brokerage. Leading brokers such as Pepperstone offer high-quality educational resources, with market analysis, integrated investing tools and access to official news feeds.
Most resources are included within the broker’s platforms, so there is no need to laboriously sift through TikTok accounts to find information. With trusted brokers, content is also produced by expert analytical teams, rather than unqualified individuals.
Traders may also want to consider brokers that offer social trading. These allow traders to follow and copy the trades of more experienced investors. Brokers that offer social trading on their platforms include Pepperstone, CMC Markets and AvaTrade.
The main advantage of social investing is that you can interact with other traders hassle-free and get advice, tips and ideas all from one place. Thus, you can benefit from the social aspect of TikTok whilst trading in real-time using a reputable platform.
Can You Trade TikTok Stock?
You cannot directly trade on TikTok. You cannot buy shares of ByteDance, TikTok’s parent company, as it is not yet listed on any public exchanges. With that said, investors could expect a TikTok IPO (initial public offering) in the future.
ByteDance is estimated to be valued at over $400 billion as of 2021, with 12 rounds of funding totalling $9.4 billion. With such a valuation, there have been rumours about a potential ByteDance IPO, however, these talks have been delayed due to regulatory uncertainties.
Should the IPO materialize, traders should keep on top of any market news. Brokers that support the IPO will notify traders once the IPO has been released. There may also be press releases by ByteDance itself.
Some brokers may also have certain eligibility requirements for traders to participate in the IPO, so it’s worth checking these before signing up.
In the meantime, there are opportunities to indirectly invest in the company through ByteDance’s major investors. Two major publicly listed companies hold shares of ByteDance: private equity company, KKR (KKR), and Japanese bank, Softbank (SFTB.Y). You can invest in these stocks at several brokers including CMC Markets and Plus500.
You can also trade ‘before the IPO’ at IG Index, which means you trade the predicted market cap as part of their ‘grey market’.
Final Word On Trading With TikTok
TikTok is a popular video-sharing social media app which can offer some market news, insights and amateur trading tips. Its ease of use, visually appealing content and intuitive algorithm could be particularly attractive for beginners looking for an introduction to the financial markets.
However, we do not recommend relying on TikTok for financial advice or trading tips. The application is not an educational platform and as such, its value in the real world is limited.
Many traders on TikTok are not professionals and the projected ‘success’ in their videos may not paint the full picture. In addition, popular accounts often have their own agenda, such as pushing ads for their own products or paid subscriptions.
Ultimately, TikTok is not a reliable or credible source of information for online investing. Instead, we recommend using reputable brokers with social trading tools, educational resources and access to reliable market news outlets.
FAQs
How Can I Use TikTok For Trading?
You can use TikTok to find market insights and trading tips or to observe other users conducting live trades.
But whilst this may be appealing for beginners, traders should not rely on TikTok for valuable research or thorough market information. Furthermore, witnessing another user successfully live trading is not an indicator of future success.
What Are The Best Trading Accounts On TikTok?
Notable accounts that belong to ‘famous’ day traders or stock market investors on TikTok include @HumphreyTalks and @Tik.Stocks.
Yet while these content creators may offer some decent trading tips, they are not the most effective way to learn about trading in the long run. Official news outlets such as @BloombergBusiness and @YahooFinance may be better options if you need market news whilst on the go.
Should I Use TikTok For Online Trading?
We do not recommend using TikTok for trading. Whilst you can gauge some insights into the forex, stock and crypto markets, it does not compare to the resources available at an online brokerage.
Many top brokers offer social trading as well as access to a variety of learning materials and trustworthy sources – all from one platform.
What Stock Exchange Is TikTok Listed On?
ByteDance, TikTok’s parent company, is not currently listed on the stock market, though there have been rumours of an upcoming IPO. Traders looking to invest in TikTok in the future should keep a lookout for announcements by brokers and financial commentators.
Alternatively, brokers such as IG Index allow you to trade pre-IPO.
Article Sources
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