Social networking tools -- a la Twitter, Facebook and LinkedIn -- are a natural fit for online investors. On social-network-equipped online investing sites, investors can share stock tips and investment strategy ideas, track one another's performance, and in some cases even automatically follow others' investing habits.

Millions of people participate in online trading communities hosted by sites such as Covestor, Cake Financial, Zecco, Trader Planet, TickerHeads, Sogotrade and Thinkorswim. Among the most advanced in social networking capability is TradeKing, an online site with more than $1 billion in assets under management, 175,000 account holders and 84 employees in Boca Raton, Fla., and Charlotte, N.C.

"We're all about breaking down old barriers," says Richard J. Hagen, Jr., TradeKing's president and COO. "We're bringing modern technologies to an old, stodgy online brokerage space where it's same, same, same; we felt there was an opportunity to introduce social media tools." Among those tools are trade notes (micro blogs that investors can attach to various individual trades), certified trades (that let investors publish their trades to others on the site), a leaderboard that tracks users' portfolio performance and more than 600 investor blogs.

"Our trader network delivers a level of trusted transparency, communication and collaboration never before possible in a trading environment," Hagen contends. "And our clients have responded to it very positively -- the social media usage on our site now tops more than 50,000 investors with 15,000 frequently contributing content and some 2,300 investors sharing trades."

The company charges a flat $4.95 for equities trades, yet Hagen describes its customer service as "shockingly great." "For $4.95 you may think you're going to get what you pay for," he notes. "But we offer country-club-like customer service. It's something we spend lot of time, training and effort on. Even the name TradeKing came from the idea that the customer is the king."

According to Hagen, the firm applies social media technologies to customer service: In TradeKing's online trader network, traders can post questions or problems regarding accounts, trades or the site itself. "Our trader network has become a service channel for us," Hagen says. "I don't think you see that at Morgan Stanley or Merrill Lynch." TradeKing uses interactive software tools from LivePerson to enable customer service agents to handle live chats and e-mails with customers, assign a service ticket number to each inquiry for management and tracking, and feed records of those conversations into an archive.

TradeKing is regulated by FINRA and the SEC and therefore has to follow a "know your customer" rule. Hagen says the firm accomplishes this with an extensive registration process that requires the prospective investor to provide his Social Security number as well as chunks of other personal and financial information. "We have a responsibility to ensure we're watching out for our customers," he notes. "There's a lot of information we need to collect and maintain in order to make sure that people are investing within their means."

But TradeKing only lightly monitors user behavior. "We don't like to interfere with dialogues that are going on," Hagen comments. "In the four and a half years we've done this we've pulled fewer than 10 postings down because they were advertisement-related or not useful to the community. We let the dialogues happen."

Customer complaints do not get pulled down, either, Hagen points out. "It's important for us to be transparent about everything," he says. "If there are things customers don't like about us, you can read about them in a forum. They won't be edited by us in any way."

A Modern Infrastructure

The social networking tools TradeKing uses have all been built by its Charlotte-based IT staff using Ruby on Rails, open source software hosted by Engine Yard. (TradeKing has 12 developers on its full-time IT staff of 15, which is supported by 10 outside consultants.) Mike Massey, who drives the strategy and development of TradeKing's social media efforts as the firm's director of social media technology, had to do a certain amount of learning on the job, according to Hagen. "When we got into this in 2005, going to a headhunter and saying, 'Go find me someone who's an expert in social media,' wasn't feasible," Hagen recalls. "There weren't any people. You had to find smart people who got what Web 2.0 was all about and bring them along."

Hagen reports that TradeKing's primary data center is hosted by Savvis at the provider's Weehawken, N.J., facility; SunGard hosts TradeKing's live backup site in North Carolina. The firm uses IBM machines for all its core hardware and Oracle (formerly BEA) WebLogic application servers. The IT budget, Hagen reveals, ranges between $5 million and $10 million annually.