This post has been a long time coming. I have been pretty active on StockTwits this year, though nowhere as active as I would have liked but trading is not my full time job, and I think it is an absolutely fantastic concept and product. Even after being part of it for almost a year now, I am still amazed by the generosity of the traders (at least those who I follow) there. I think what really amazes me about this generosity and the willingness to share is the fact that it comes from a community that is pretty much thinking about money or how to make money (I know its more about the process but the goal is to be successful after all!) for most of the day. Now, that was the good part about StockTwits. But as is to be expected with any community that is growing so rapidly, you will find the bad too with the good. If you are new to the community, it is easy to be lost or as much as I hate to say it, even mislead, if you are following the wrong people. So, here are a few suggestions from me on how to make the best use of StockTwits.
1. Be selective on whom you follow: Take my example. After almost a year, I follow only around 20 odd people (this is just a number I am comfortable with, you might be able to follow and pay attention to a lot more people). I know for a fact that there are a lot more excellent traders I could follow, but I find it useful to follow only those traders whose trading style matches mine. I am a momentum trader and it makes no sense to me to follow a value investor, no matter how good he might be, though I might follow an options trader if I am interested in learning options. As the community grows larger, it becomes necessary to block the "noise". Be specially cautious of the "experts" who always seem to be on the right side of every trade.
2. Make the ideas your own: One will never become a successful trader, unless one starts taking responsibility for one's own actions. You don't need me to tell you that in trading one can always find someone else to pass on the blame to. Just visit any yahoo board to see what I mean. From insider selling to short sellers to market managers, there is always someone to blame. I see StockTwits mainly as a generator of ideas, many more pairs of eyes, some better than mine, scouting for setups. How I play the setup is entirely my call. If the trade ends up winning money, the credit goes to me (though one should always give a shout out to the trader who brought the stock to your attention) and if I end up losing money on the trade, the "blame" goes entirely to me too. The same setup can make money for one trader and lose money for another. All depends on how YOU play it.
2. Do not follow trades: Many traders will tell you when they are entering a trade and will mention how much they gained after they exit a trade. Nothing wrong with that. But the fact is that a lot of the traders only post winning trades and conveniently forget to mention the losing trades. But that is not the reason you should not blindly follow other traders into trades, no matter how successful they are. As stated above, it is your money and you have to do what you think is right. How can you take responsibility for the losses if you don't even understand why you got into the trade in the first place? Personally speaking, I am not the least bit interested if the guy I am following made or lost money from a particular setup. All I am interested is how I played that setup. Giving my example again, I am too quick while taking profits. Many times I have got thanks from fellow traders who actually played the same setups that I pointed out but ended up making more money than I did as they had more patience. Again, make the ideas your own!
3. Ask questions: This to me is one of the most useful things that StockTwits has succeeded in doing. Bringing a bunch of accomplished traders together and like I said before, its amazing how helpful some of these people are. Instead of blindly following a successful trader into trades, which might get you money in the short term, ask him how he found or why he entered the setup in the first place, which will be a lot more profitable in the long term. Again, with the large number of people involved, you can't expect everyone to be be helpful and that is why it is important to be selective in whom you are following.
To sum it up, I think the best use one can make of StockTwits as a generator of ideas and a place where you can learn from the best. There are no short cuts to being a successful trader and like in life, sometimes you just gotta make your own mistakes, but learning from those who are successful can certainly do more good than harm. And for me, the worst way you can use StockTwits is to blindly follow someone else's trades or ideas, even though it might be making you money in the short term.
Take care and good luck!