Social trading is a service that allows investors to replicate the operations of expert traders. Social trading requires little or no knowledge about financial markets, and only requires that the user make a correct selection of traders to follow, especially considering the percentage of successful operations and the diversification of the financial instruments traded by the expert, that is to say that the expert does not concentrate on a single financial instrument or, failing that, not to replicate several traders that operate only the same financial instrument.
Social trading introduces a new way of analyzing financial data by providing a ground to compare and copy trades, techniques and strategies. 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.
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. 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.
Social trading is a speculative activity for the pursuit of money in the short term considered negatively and subject to criticism for the damage on the real economy.
Video Social trading
Key features
- Information flow: Social trading involves the free flow of information between individual financial investors. Unencumbered access to information is important in financial trading 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.
- 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.
- 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.
Maps Social trading
See also
- Algorithmic trading
- Copy trading
- Mirror trading
- Trading strategy
References
Source of article : Wikipedia
0 Comments