Social trading

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Social trading is a service that allows investors to follow, share and replicate the trading strategy of expert traders using copy trading or mirror trading techniques. Social trading requires little or no knowledge about financial markets, and only requires that the user make a correct selection of the traders to follow. This is often done by looking at the past returns of expert traders using social trading networks that publish such information.

Social trading is an alternative way to analyzing financial data by looking at what other traders are doing and comparing and copying their techniques and strategies. [1] Prior to the advent of social trading, investors and traders were relying on fundamental or technical analysis to form their investment decisions. Using social trading investors and traders could integrate into their investment decision-process social indicators from trading data-feeds of other traders. These social trading networks can be considered a subcategory of online social networks.[2]

Social trading allows traders to trade online with the help of others and some have claimed shortens the learning curve from novice to experienced Forex trader.[3] Traders can interact with others, watch others take trades, then duplicate their trades and learn what prompted the top performer to take a trade in the first place. By copying trades, traders can learn which strategies work and which do not work.[4] Social trading is used to do speculation; in the moral context speculative practices are considered negatively and to be avoided by each individual.[5][6]who conversely should maintain a long term horizon avoiding any types of short term speculation.

Key features[edit]

  • Information flow: Social trading involves the free flow of information between individual financial investors.[citation needed] Unencumbered access to information is important in financial trading[7] and that makes the free exchange of information of interest to small scale as well as individual investors.
  • Cooperative trading: Social trading offers traders the opportunity to work together in trading teams which can trade the markets collaboratively, whether by pooling funds, dividing research or through sharing information.[citation needed]
  • Monetization: As with social networks in the broader sense, monetization strategies are not always clear. As with social networks in general, it is possible, however, that the long-term worth of such websites may come from the variety and depth of data about their users which their active communities are likely to generate.[8]
  • Transparency: Social trading platforms reveal traders' performance stats, open and past positions, and market sentiment, giving members complete information to assess the credibility of the contributors they follow on the platform.[9]

See also[edit]

References[edit]

  1. ^ "Copy Trading". Copytrader. November 29, 2017. 
  2. ^ "Social day trading comes to facebook". SocialTimes. July 21, 2010. 
  3. ^ "What is Social Trading? - Definition from ForexDictionary". ForexDictionary.com. Retrieved 2018-03-19. 
  4. ^ "social-trading-because-it-sells". Forex Magnates. August 30, 2012. 
  5. ^ Ryan, John A (1902). "The Ethics of Speculation". International Journal of Ethics. 12 (3): 335–347. JSTOR 2376347. 
  6. ^ http://www.newadvent.org/cathen/14211a.htm
  7. ^ About.com April 4, 2011.
  8. ^ Wired July 30, 2007.
  9. ^ "Social Investing Equals More Opportunity". The Huffington Post. Retrieved 2016-01-15. 

External Links[edit]

Official Blog