Social trading
Encyclopedia
Social trading
is the process through which online financial investors rely mostly (or solely) on user generated financial content gathered from various Web 2.0
applications as the major information source for making financial trading decisions.. Social trading introduces a new way of analyzing financial data. Until recently investors and traders were relying on fundamental and technical analysis to form their investment decisions. Now they can weave into their investment decision process social indicators that are fueled by a transparent real-time trading data feed of all the users in the social trading network.This is now being introduced as social financial analysis. Social trading has also been associated with a variety of online social trading networks These social trading networks can be considered a subcategory of online social networks.
, financial trading was characterized by the relationship between customers and brokers and was centered upon the physical locations of bourses and exchanges. As the internet has gathered momentum electronic trading
has become a major focus for the trade in financial assets amongst individual investors. The emergence of Web 2.0
, Facebook
and Twitter
in particular was followed in the financial trading industry with financial traders becoming early adopters of the knowledge-sharing capacities provided. Financial traders perceived these services as new sources of information, which was financial, economical or technical in its essence. Online financial trading companies have exploited the popularity of the new social networking channels and it is in this context that fully fledged social trading networks have emerged, taking online social networks as their model. Among the first such networks were eToro
, Zecco.com
and Currensee
, soon followed by FXStat
or Zulutrade.
Recently, with the assimilation of Web 2.0
properties in almost every trading platform, financial traders have begun to follow information that is accessible through these services, and which is social rather than financial. This is done either explicitly (by intentionally following the trading activities of one or more selected traders, either manually or automatically), or implicitly, as one's trading decisions are unintentionally influenced by the trading activities of other traders.
Social trading involves the free flow of information between individual financial investors. Unencumbered access to information is held to be of premium importance 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. Websites like eToro or StockTwits offer real time feeds recording how the social trading community is trading.
Monetization -
As with social networks in the broader sense, the monetization strategies in play within the social trading phenomenon are not always clear. At launch, Currensee’s sole recorded revenue source was an introducing brokers deal it negotiated with AvaFX.. 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.
Social trading
Social trading is the process through which online financial investors rely mostly on user generated financial content gathered from various Web 2.0 applications as the major information source for making financial trading decisions.. Social trading introduces a new way of analyzing financial data...
is the process through which online financial investors rely mostly (or solely) on user generated financial content gathered from various Web 2.0
Web 2.0
The term Web 2.0 is associated with web applications that facilitate participatory information sharing, interoperability, user-centered design, and collaboration on the World Wide Web...
applications as the major information source for making financial trading decisions.. Social trading introduces a new way of analyzing financial data. Until recently investors and traders were relying on fundamental and technical analysis to form their investment decisions. Now they can weave into their investment decision process social indicators that are fueled by a transparent real-time trading data feed of all the users in the social trading network.This is now being introduced as social financial analysis. Social trading has also been associated with a variety of online social trading networks These social trading networks can be considered a subcategory of online social networks.
History
Prior to the emergence of the InternetInternet
The Internet is a global system of interconnected computer networks that use the standard Internet protocol suite to serve billions of users worldwide...
, financial trading was characterized by the relationship between customers and brokers and was centered upon the physical locations of bourses and exchanges. As the internet has gathered momentum electronic trading
Electronic trading
Electronic trading, sometimes called etrading, is a method of trading securities , foreign exchange or financial derivatives electronically...
has become a major focus for the trade in financial assets amongst individual investors. The emergence of Web 2.0
Web 2.0
The term Web 2.0 is associated with web applications that facilitate participatory information sharing, interoperability, user-centered design, and collaboration on the World Wide Web...
Facebook
Facebook is a social networking service and website launched in February 2004, operated and privately owned by Facebook, Inc. , Facebook has more than 800 million active users. Users must register before using the site, after which they may create a personal profile, add other users as...
and Twitter
Twitter
Twitter is an online social networking and microblogging service that enables its users to send and read text-based posts of up to 140 characters, informally known as "tweets".Twitter was created in March 2006 by Jack Dorsey and launched that July...
in particular was followed in the financial trading industry with financial traders becoming early adopters of the knowledge-sharing capacities provided. Financial traders perceived these services as new sources of information, which was financial, economical or technical in its essence. Online financial trading companies have exploited the popularity of the new social networking channels and it is in this context that fully fledged social trading networks have emerged, taking online social networks as their model. Among the first such networks were eToro
EToro
eToro is a financial trading company based in Cyprus. It provides personal online financial services in forex, commodities and stock indices through its own electronic trading platform....
, Zecco.com
Zecco.com
Zecco.com is an online investing company with operations in San Francisco, California and Pasadena, California. Investors on Zecco.com have access to Zecco Trading, its stock, option, mutual fund and bond trading platform. Investors also have access to Zecco Forex, which provides spot foreign...
and Currensee
Currensee
Currensee is a financial services company based in Boston to serve as a social network for foreign exchange traders...
, soon followed by FXStat
FxStat Group
FxStat or FxStat Group is a financial services company created in April 2010 and focusing on the foreign exchange market. FxStat's forex platform initially provided social networking and financial analysis features...
or Zulutrade.
Recently, with the assimilation of Web 2.0
Web 2.0
The term Web 2.0 is associated with web applications that facilitate participatory information sharing, interoperability, user-centered design, and collaboration on the World Wide Web...
properties in almost every trading platform, financial traders have begun to follow information that is accessible through these services, and which is social rather than financial. This is done either explicitly (by intentionally following the trading activities of one or more selected traders, either manually or automatically), or implicitly, as one's trading decisions are unintentionally influenced by the trading activities of other traders.
Key Features
Information Flow -Social trading involves the free flow of information between individual financial investors. Unencumbered access to information is held to be of premium importance 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. Websites like eToro or StockTwits offer real time feeds recording how the social trading community is trading.
Monetization -
As with social networks in the broader sense, the monetization strategies in play within the social trading phenomenon are not always clear. At launch, Currensee’s sole recorded revenue source was an introducing brokers deal it negotiated with AvaFX.. 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.