Technological developments within the Fintech industry continue to shape our outlook towards investments, trading, and the financial markets.
The stock market has always attracted investors. The truth is it has never been difficult for new investors to trade stocks, indices, bonds, commodities, cryptocurrencies, and ETFs. Mainly, because the initial capital required to get started can be relatively low. However, becoming an overnight trader without any knowledge of the financial markets would have been considered a senseless notion.
In the past, new investors would source portfolio managers and/or investment advisors for them to invest more shrewdly. This was costly and time consuming, therefore not all investors were able to take advantage of this. Trading therefore used to sometimes be perceived as elitist, which left many markets untapped.
And then … Social Trading was launched.
After years of many novice traders fumbling around in the dark, possibly losing money or not moving on from a demo to a live account; the first social trading platform was launched.
Since its inception in 2010, it has changed the landscape for all investors, whether newbie or professional. It has provided novice investors the opportunity and confidence to invest in the financial markets.
The ‘social’ in social trading, combined with copy trading technology, allows anyone of any level to follow and copy experienced, successful traders’ investment strategies and portfolios.
Social trading platforms offer a place to join and learn from a united community built of expert traders.
Once a novice has found their expert trader to follow and copy, he is essentially constantly learning. Investors can take their time to observe, interact and learn from the best.
Many existing traders also incorporate copy trading into their strategies to improve their income. It was predicted that by this year, 2021, one in three traders will rely on social trading and investment services. (Roubini Thought Lab)
Why is social trading essential to the future of finance?
Social trading is essential in the democratisation of finance. Why? Because it provides access to the trading information that investors need. The objective from the outset was to disrupt the world of trading by:
· Making trading as simple as possible to understand and learn.
· Making it easily accessible to anyone, anywhere.
The copy trading element of social technology widely opens new markets and allows access to users worldwide.
It also provides everyone with:
· A faster grasp of the financial market
· A collaborative trading community of investors
· Reliable and visually easy to understand trading guidance andinformation
· Professional management tools for both novice and advanced traders
Why social trading is a win-win for all
Brokers and start-ups
Social trading popularity has soared.
A significant increase of new investors turned to social trading services during the COVID-19 pandemic. It was a way of gaining exposure to investment opportunities, and for many, this was a necessity.
For many forex brokers or multi-asset trading platforms, adding social trading is becoming a must.
Novice and Expert copy traders
Novice investors are given – for FREE - the knowledge, the insight, the strategies, and the trading platform. Complete with the tools and on-hand teachers to copy, allows traders to simplify the learning curve. Finding expert traders who display an outstanding and consistent performance is a key challenge.
Social Trading’s incentive for Master Traders
One aspect that should be explained is why expert traders share their strategies, knowledge, and trades for people to copy. Essentially for the same reason, a person with a passion or skill shares their success on social media.
Reaching a level of prestige (followers) turns a person into an influencer within their market or industry. With social media, influencers reap the rewards, with payments or gifting, to post about a company, products, or services.
Social trading platforms offer an experienced trader the opportunity to build prestige and grow a global community of followers.
The positive impact of social trading in the financial market
Through expert trader influence and guidance to online copy-trading communities’, information on the financial markets becomes transparent and accessible to whoever wants to learn how to trade on the stock market. Therefore the advances of Fintech combined with a social ecosystem liberated the world of trading to ALL.
How the world invests in financial products changed with Social Trading. Now investors, master traders and brokers have the same key objective and aligned interests which leads to their success and return by working together.