Individual trading is not hot anymore! Solo forex traders are now taking the social route and making a network of forex traders. Incidentally, 8%-10% of the $2.5 trillion daily traded money in forex is generally handled by solo traders who are now turning to the biggest social networking sites, therefore connecting with peers and coming out with market-beating strategies, according to the reports.
This big change has mainly been caused by evolution of the social trading networks which allow users to see what others are trading, swap ideas for mutual benefit, chat with fellow traders for a better idea on the market sentiments and even copy trades of the biggest experts of the market. This change has been welcomed by most of the individual forex traders and Patrick Orini is one of them. Patrick has been an online forex trader for the last 8 years and he stated that social trading networks give him a way of gauging market sentiments easily and he loves to skip the research part. Patrick stated that if he knows who the most prominent players in the market are, he can directly start following them and even copy their trades. The method is not full-proof, but, is definitely attractive enough to lure new investors.
Social forex trading is mutually beneficial to both experienced and new traders. For new traders, it’s an easy way to check what the old players of the game are doing, follow their tactics and therefore earn from this high liquid market (It is important to choose the real old players, not the ones who claim to be old players, but, in reality, are not). On the other hand, experienced traders, by posting their trading decisions with newbies, not only help them, but, also build a following. This helps them on the longer run and makes them an authority in the forex industry. Not only that, but if experienced traders share their strategies with other reputed traders, they often come up with tactics which prove to be amazing. For some social trading networks, traders who want to copy trades of other expert traders may need to pay depending on the rank of that expert trader in the social forex trading platform.
Some of the biggest names in the social trading network are: Tradeo, Currensee and eToro. Tradeo is a social forex trading network which is available for traders based in Tel Aviv. It was launched around 3 months ago and as Jonathan Adest, the co-founder and CEO of Tradeo says, it has posted trades worth half billion of dollars and has more than 10000 traders. According to Adest, Tradeo is not a simple forex broker such as FxPro, Alpari or IronFX; rather it can be touted as network for brokers – something like an online trading room. Adest added that Tradeo also tries its best to combat bogus or inaccurate information posted. Unlike anonymous comment boards, with Tradeo, you can easily check the reputation of a trader by seeing his past trade results and total profit or loss margin. By checking a few facts on the trader, you will know whether to believe those comments or not.
In earlier 2012, eToro also started its journey in social forex trading sector (It has been operational as a forex broker for quite some time though). It works along the lines of Tradeo, but, probably comes up with better tools and features to gauge the reputation of a trader. Also, it is available for worldwide audience and copying other traders doesn’t cost money here (Other than the money you put in for copying a trader, you can decide what percentage of your total capital to put in while copying trades).
That’s not all! Derwent Capital, the London based hedge fund firm is soon going to come up with an application that will use daily tweets of Twitter to create sentiment indicators for all the major currencies and even other assets. It’s to be seen that how this new application is welcomed by social forex traders.