Relationships on trust
The idea that trading on the stock exchange is accessible and simple is gradually becoming the norm. This is evidenced by the record influx of private investors, provoked, among other things, by the emergence of high-tech brokerage services. Social trading, which exists at the intersection of social media and securities trading, can become a driver for further development of the industry, improving customer experience and the image of the stock market as a whole.
Despite the obvious uberization of brokerage services, social network trading in Europe is just beginning to gain momentum. If in Europe 15% of the population is involved in the stock market, then in the USA it is 55%, and 25% are engaged in trading using social networks. This is largely due to the transparency of the stock market, the openness of companies and the abundance of information about issuers.
An important contribution to this information field is made by various Internet resources where private investors communicate with each other, and discuss investment strategies and trading ideas.
One of them is Seeking Alpha. Such a resource is a godsend for a private investor who cannot afford a subscription to professional information resources such as Bloomberg. Any user can write an article here, for example, on Facebook promotions, and other visitors can comment. Additional weight to the author of the article is given by the presence of Facebook shares in his investment portfolio. Everyone understands that it is one thing to come up with an idea and quite another to put money on the table. Recently, the author of the most successful channel on this portal, the revenue from subscriptions exceeded $1 million.
Difference in approaches
There is no classic concept of social trading. He can live on specialized forums, in web terminals, inside brokerage services and without being tied to a specific business. The main requirement for social trading is to ensure open communication between investors of any level, from newcomers to the exchange to advanced gurus. Another important feature is the ability to copy the trades of more successful investors, and not just watch their trading strategies. Experienced investors can earn additional income in the form of commissions from their subscribers.
In Europe, social networks for traders began to appear in the 2000s. but only now, thanks to the initiative of technologically advanced brokers, this phenomenon is beginning to scale. The new wave of social trading involves free access to communication with other investors directly from your smartphone, inside a mobile application, and focuses on the widest possible audience and all exchanges in the world. Brokers use social networks not so much to make money but to better understand the needs of clients and improve their user experience.
Social trading in Europe and USA is usually paid services based on auto-following: brokers earn commissions from each copied trade and share a part of these commissions with traders.
If in Europe the number of subscribers of social networks for investors totals hundreds of thousands (there are still no adequate statistics for this audience), then on the international market we are talking about millions of clients.
The opinions of experts of banks, financial and investment companies presented in this section may not coincide with the opinion of the editors and do not constitute an offer or recommendation for the purchase or sale of any assets.