Someone on Twitter posts a screenshot showing a 500% gain on a stock. They say it is "going to the moon." You buy without doing any research. Two days later the stock crashes and you are stuck holding a 40% loss. This is what happens when you follow tips blindly, and it is one of the most expensive mistakes traders make.
Why People Follow Tips
Trading is hard. Doing your own analysis takes time and effort. Following someone else seems easier. Traders follow tips because of:
- Laziness: It is easier to copy than to learn
- Insecurity: Not trusting your own analysis or judgment
- FOMO: Fear of missing the next big winner
- Social proof: If others are buying, it must be good
- Authority bias: Assuming someone with followers knows more
- Hope: Wanting to believe in easy money
The uncomfortable truth: The people giving tips are often selling to the people buying their tips. By the time you see a stock tip online, the person sharing it has usually already profited and needs others to buy so they can sell.
The Problems With Following Tips
Even if the person giving the tip is genuine, following it blindly has serious problems:
1. Different Entry Points
The person giving the tip entered at a different price than you. They might be up 50% when you buy. If the stock drops 30%, they still have a profit while you have a big loss.
Entry Point Problem
- Tipster bought at $10
- Stock runs to $20, tipster posts screenshot
- You buy at $20
- Stock drops to $15
- Tipster is up 50%, you are down 25%
2. Different Exit Plans
You have no idea when the tipster plans to sell. They might exit at any moment, leaving you holding the bag.
3. Different Risk Tolerance
What is a small position for them might be a huge position for you. Their 1% of portfolio is your 20%.
4. No Context
Tips come without the reasoning behind them. Without understanding why, you cannot know when the thesis is no longer valid.
The Social Media Tip Economy
Social media has created an ecosystem where sharing tips is profitable regardless of whether followers make money:
- Pump and dump: Promoters buy, hype, then sell to their followers
- Subscription services: Selling access to "exclusive" tips that do not outperform
- Affiliate links: Getting paid when followers sign up for brokers or courses
- Engagement farming: Controversial tips generate attention regardless of accuracy
The business model: Most trading influencers make money from their audience, not from trading. Their incentive is to get attention, not to help you profit.
Why Even Good Tips Fail
Even honest tips from skilled traders fail when followed blindly:
- Markets change between when the tip is given and when you can act
- Your execution is different from theirs
- You do not have the same supporting analysis
- You will not know when to exit
- You cannot adapt when conditions change
The Execution Gap
A skilled trader shares a tip:
- They enter at $50.10 with a tight stop at $49.80
- By the time you see it, the stock is at $51
- You enter at $51 with no clear stop
- Stock drops to $50.50, they exit at break-even
- You hold hoping for recovery, lose 5%
Same tip, very different outcomes.
Red Flags in Trading Tips
Learn to spot dangerous tips:
- "This is going to explode!" - Hype language without substance
- "I just bought" - They want others to push up their position
- No stop loss mentioned - They are not managing risk and neither will you
- Screenshot of gains - Proves nothing about future performance
- "Do your own research" - Disclaimer so they are not liable when you lose
- Guaranteed returns - Impossible. Run away.
- Urgency - "Buy now before it is too late" is manipulation
How to Properly Evaluate Tips
If you encounter a trading idea, evaluate it rather than following blindly:
- Understand the thesis: Why is this trade expected to work?
- Do your own analysis: Verify the claims with your own research
- Define your entry: What price makes sense for YOUR entry?
- Set your stop: Know where you will exit if wrong
- Plan your exit: Know your profit target before entering
- Size appropriately: Never let someone else determine your position size
The rule: If you cannot explain why you are taking a trade in your own words, you should not take it. "Because someone said so" is never a valid reason.
Building Your Own Analysis Skills
Instead of following tips, develop the ability to find your own trades:
- Learn technical analysis basics
- Understand fundamental metrics
- Study chart patterns and price action
- Develop a systematic screening process
- Backtest strategies before trading them live
- Keep a journal to learn from your own experience
When Outside Ideas Can Help
Other traders' ideas can be valuable when used correctly:
- As a starting point: Use tips as ideas to research, not trades to execute
- For education: Study how skilled traders analyze situations
- For screening: Ideas can point you toward stocks worth analyzing
- For different perspectives: Consider viewpoints that challenge your thesis
Using Tips Correctly
Wrong way: See tip, buy immediately, hope for the best
Right way:
- See tip about Stock XYZ
- Research the company and chart
- Determine if it fits YOUR trading strategy
- If yes, find YOUR entry point, stop loss, and target
- Size the position according to YOUR risk rules
- Execute on YOUR terms, not theirs
The Independence Mindset
Successful traders think independently:
- They trust their own analysis over popular opinion
- They take responsibility for every trade they make
- They learn from mistakes rather than blaming tip-givers
- They understand that nobody cares about their money more than they do
- They know that sustainable success comes from skill, not luck or tips
Build Your Own Track Record
Pro Trader Dashboard helps you track your own trades and develop your edge. See what actually works for you instead of relying on others. Your data, your strategies, your success.
Summary
Following trading tips blindly is a losing strategy. The people giving tips have different entry points, exit plans, and motivations than you do. Many tip-givers profit from their audience rather than from trading. The solution is to develop your own analysis skills, use tips only as starting points for research, and always take full responsibility for your own trading decisions. The traders who succeed long-term are those who think for themselves.
Want to develop your own trading skills? Learn about creating a trading plan or read our guide on technical analysis.