The stock market offers an excellent option to make some serious money, but that’s not the only reason why the stock market is appealing to investors; it’s also appealing because it is constantly changing. New ways of trading are always being introduced, which keeps things fresh and exciting – and ups the earning potential that the stock market offers.
One of the newest forms of trading that has recently been introduced to the market is social trading. Social trading refers to the process of trading that online financial investors use on a user generated financial content, and that information is gathered from a variety of web 2.0 applications as the major source of information for making financial trading decisions.
One of the key benefits of social trading is that is offers a new way to analyze financial data. Because it provides a ground to compare and copy trades, techniques and strategies, it offers new opportunities for investors. Before social trading was introduced, investors and traders had to rely on fundamental and technical analysis to generate the decisions they made regarding their investments. Now, by utilizing social trading, investors and traders can integrate their investment decision making process with social indicators from trading data feeds, as well as other traders.
Thanks to social trading, traders are able to trade online with the assistance of others, which many have claimed have shortened the learning curve from beginner to experienced Forex trader. Traders are able to interact with others, they can easily watch others take trades and then can copy their trades and find out what lead the top performers to choose a specific trade in the first place. When traders are able to copy the trades that experienced traders have made, they can learn which strategies work and which do not.
Social trading has done a lot for the trading industry. The numbers related to social trading are increasing as brokers, such as Binary Uno (which provides the iFollow social trading tool), see them as new growth engines for converting new clients and retaining old ones. Another benefit of social trading is that it has increased participation in the market and has increased the amount of trades that go through.
Important Features
As with all types of trading, there are some key features that are associated with social trading. These include:
- Information flow, which refers to the free flow of information between the various financial investors.
- Cooperative trading, which allows traders the opportunity to work with one another in trading teams, which can all for the markets to trade collaboratively.
- Transparency, which allows traders to see others performance stats, in both open and past positions, as well as market sentiment and giving members complete information to assess the credibility of the contributors that they follow.
Social trading has proven to be a very successful means of trading for many people since its inception. As social platforms continue to grow, it is safe to assume that the social trading platform will continue to grow and that rapid success for traders will be attained.