Forex Social Trading: What’s Hot and What’s Not

What do you get when you combine social media and forex trading? Forex social trading! That’s right, several trading firms have adopted to what’s trending these days and found opportunities in social media integration.

Social trading services, such as Tradency and Leverate, have seen improvements in client acquisition and retention as they added features that keep their users engaged. Higher trading volumes were also recorded, thanks to functionalities that allow clients to automate their trades based on setups taken by the traders they follow.

Looking into Leverate‘s trade execution data retained by Sirix social trading network indicates that beginner traders were able to speed up their learning curve and improve their profitability by following expert traders. In fact, a novice trader going by the username WeiWei advanced to the list of top traders simply by following trades taken by other advanced traders. “It’s really exciting watching new members develop by copying veteran traders,” noted Sirix Social Product Manager Lior Gazit. “When we see an inexperienced trader perform this well after following a more knowledgeable master, we know that the copy trading system is performing exactly as we had hoped.”

Meanwhile, a cloud-based social networking trading platform called FXSocio took a step further in redefining the forex trading experience by including features from social media giants like Facebook and providing clients with access to market tools from any mobile device. “Social media is revolutionizing how people shop, interact, travel and communicate.” said FXSocio’s creator and lead developer Rohan Hall. “Why not revolutionize the way they trade?”

FXSocio forex social trading interfaceIn its current version, FXSocio’s interface contains the usual social media features such as the activity feed, wall, and private messaging. Traders can communicate with the traders they follow and make use of the built-in copy trading feature. For now, FXSocio can be used on MetaTrader4 only, but the company is looking to expand its integration on other forex platforms as well.

While some firms have made good progress in forex trading social media integration, others have failed to take off. Last month, LigaForex announced that it will be shutting down operations after less than a year in existence. The firm has positioned itself in the Asia-Pacific market during its launch, as it sought to take advantage of the substantial trading volume and strong growth prospects in the region. However, it appears that the company caved to competition, as established firms with fully-integrated forex social trading platforms have drawn more clients worldwide.

Perhaps this is an indication that, while innovation is opening up more opportunities to make profits in the forex trading arena, market participants are still generally cautious when it comes to picking which trading services to subscribe to. Financial market authorities might take this as their cue to step in and draft additional regulations to have top traders register as financial advisers. In fact, Britain’s Financial Conduct Authority has already expressed its intention to have a regulatory structure for copy trading or mirror trading.

While copying other traders’ setups through social trading platforms seems like a tempting fast-track to profitability, it could have its drawbacks. Some industry insiders have remarked that this practice might turn out to be self-serving for brokers, as mirror trading could wind up encouraging new clients to trade more and larger positions without bothering to learn how the forex market works.

What are your thoughts on the developments in forex social trading? Is this something you are using or would be interested to try out? Don’t be shy to post in our comment box below!

  • ForExchange

    Hi Espipionage!

    Do you know Zulutrade? If yes, what do you think about it? Do you consider it as social forex trading?

    The other important thing is what you think about the quality of traders of the sites you have mentioned. How much experience do they have? Do they have a proven record? I tried Zulutrade and most traders there have no idea about trading! So following other people is dangerous, one needs really good money management too. And as you also mentioned it is a disadvantage for sure that the person does not learn to trade himself by following other which is very dangerous for the own account.

    Keep up the great posts!

    • Hmm I’ll have to look into Zulutrade. Yep, blindly following other people’s trades can be very dangerous especially if you don’t have much knowledge on the forex market or money management. Thanks for the kind feedback!

  • kechel

    I can only really talk about my own experience of eToro, one
    of the most popular sites I think.

    I’ve been on there for about 4 months now. When I first
    started looking at Forex, I thought it might be a good idea to follow &
    copy other more experienced traders. As mentioned in your article, you can ask
    questions of the traders, & I think the site themselves encourage this
    interaction of trader & copier.

    I must’ve followed & (virtually) copied about 30 of
    their best rated traders, & I think I can safely say that without exception
    they are poor. I must say, I’ve been really disappointed with the standard of
    trader. If eToro was representative of retail trading as a whole, it’s very
    easy to see how 95% of traders fail.

    I’ve looked at maybe another 150 traders on there, and they
    are either classic martingalers (lots of small wins wiped out by 1 big loss),
    or they hide huge amounts of ongoing losses in their open trades. With most of
    them, all you need to do is click on ‘Open Trades’ – this will be all red, then
    click on ‘History’, this will be all green. The losing open trades can go back
    for months on end.

    In 1 of my first conversation there, I got the advice ‘Look
    for traders with 100% win records’.

    There is constant adding to losing positions, and Stoplosses
    being widened. I’m certainly no expert, but you can tell that a lot of people
    on there trading (and I’m talking about people with hundreds of people copying
    them) really don’t have a clue.

    I’d say though it’s been useful in seeing how most people
    seem to trade, as much as ‘what not to do’ as anything.

    These are my observations anyway, but I am quite new to
    forex also, so maybe these practices are used by everyone, even successful
    traders, though I doubt it.

    And maybe eToro isn’t representative of most forex social
    trading sites, as they do seem very geared towards the social aspect, maybe
    more than some of the brokers you mention above.

    • Thanks for sharing your experience. This development has been very interesting indeed and I was actually curious if anyone had tried it out. Hope newbies take note of this!

  • K31thM3ll0r

    I trade through Etoro which if I rightly rememember came
    about after reading a post on this board.

    I have found it has advantages and disadvantages.

    Advantages can be that if you have learned the basics you can increase your
    knowledge by copying other sucessful traders but you need to interact with that
    trader as to why they the triggered a trade.

    You find a new way of making like minded friends even thoughyou may never meet.

    The helpdesk are always helpful

    I now trade 75% of all trades on my account (with sucess)

    Disadvantages I have found have been the trading platform (I cannot put in
    trailing stops when trade goes into significant profit).

    There used to be no control if the copy trader adjusted the stop loss on a
    potential losing trade although you could close the trade manually.

    A drawback is the amount that is allocated to each copy trader and how much is
    left dormant because the trades you copy are based on an equal percentge to
    what the copy trader puts into the trade. So if a copy trader goes EUR/USD with
    1% of his balance then your trade will be 1 or 2% of his 1%. the copy trader
    may well be risking $100 but your trade will only be $1 or $2.

    It has an advantage because with the consistently profitable traders who may
    only lose a few trades then it will not blow your account, however there are
    some copytraders who press buttons for the sake of it and usually after what
    may seem like a good sucessful run manage to blow their account, yours and
    those following

    Another disadvantage is that with Etoro only stocks can be traded from the
    Openbook and in order to trade Forex pairs you have to log into the Webtrader.

    If there was a few pieces of advice I would give it would be regularly review
    the traders you are copying (adjust if necessary), remember it is not just fire
    and forget, be patient and keep a journal for your trades and your copy traders
    trades.

    In all my experience has been positive and this has encouraged me to explore
    the use of MT4 to have greater control over my trading

    • Thanks for sharing your thoughts and for breaking down the advantages and disadvantages. I agree that proper trading habits, such as being patient and keeping a journal as you mentioned, must still be practiced even if you take copy trades. Keep it up!

  • Dushyanth Sivalingam

    is this a system created by the wallstreet guys to track down what the majority people are thinking ?? then they can manupulate the market.. i don’t think this is a good idea.

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