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?”
In 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!