Has Social Trading Profitability Disrupted the FX Market?

Social trading has come a long way since automatic replication, or mirror trading, was proposed back in 2005. New innovative services continue to be added and the buzz around it hasn’t ceased. but exactly what kind of impact has social trading had on the industry?

Traders who use social trading experience 311% higher profits than traders who don’t

Social trading has most certainly disrupted the traditional trading system by bringing down the otherwise high entry barriers involved in becoming a professional trader. It has allowed new traders to become successful by shortening the learning curve and it has enabled more expert traders to spot profitable trends quicker and easier.

Let’s look at some numbers to see exactly how social trading has impacted the industry:

Traders who use social trading experience 311% higher profits than traders who don’t and traders who use a combination of social and non-social trading realize 125% higher profits that those using non-social trading exclusively, according to a recent study.

By implementing social trading tools, a broker can boost the lifetime of the average trader from 129 days to 150 days, can increase his/her P&L by 40% and his/her net deposits by 32%.

A trader guided by social trading will typically open an average of 64% more positions and trade a 55% higher volume than a trader not using a social trading tool.

Social trading has proven to be beneficial to brokers and traders alike and is increasingly becoming an integral part of traders' trading strategies. Traditionally, traders would analyze the market, news reports and forecasts in order to design their strategies. As social trading has matured, we have begun to see traders analyzing other traders’ activities with the same depth as they do the markets. Social trading has become a wonderful tool for traders to keep a pulse on market sentiment.

In Asia, social trading has proven to be an incredible tool for money managers as they set themselves up as masters and their clients as followers, adding transparency to their operation.

As competition continues to drive the industry forward, and the quality of the service continues to improve, as transparency continues to be a key factor in development and the social industry as a whole strives to keep us more and more connected, then social trading will just keep getting bigger and better and investing will continue to become easier and more affordable for everyone.