Have you ever had someone take their money and invest it in you because of your success as a trader? What if you could harness the collective wisdom from a crowd with your investment decisions? Better yet, imagine if you had a way to find out what the most successful traders are doing and then be able to copy their every move. In doing this you could share in their success by using your money to match their investments and then also match their profits. That is the objective of social trading. Social trading opens up the global markets for people to trade in a transparent way with each other. It offers a platform of communication whereby you can view the investments made by millions of other people and even have the ability to communicate with each other. A recent MIT study on Tuning Social Networks to gain the Wisdom of the Crowd was able to demonstrate positive effects of social trading versus manual individual trading decisions. Lab Researcher Dr. Yaniv Altshuler commented by saying “This study demonstrates how an efficient collaborative trading community can be formed by carefully balancing the complex mixture of ‘trend setters’ and ‘bellwethers’ who govern the behavior of the crowd.” In addition Professor Alex Sandy Pentland made these comments about the research “we are helping to optimize the information they draw from the network, providing higher likelihood of increased gains, and helping to avoid dangerous market bubbles.”
Ultimately, the challenge is how to decide who to copy. A good social platform will enable you to choose your own risk level whether it is low, medium or high risk. It should also enable you to see the historical trade executions of those that you are looking to follow. When it comes to social trading, you want to make sure that you are looking at the success of a trader not based on short track records, but rather longer track records of success. In addition, you ideally want an online trading platform that can allow you to follow an index of the top traders in order to reduce your overall risk exposure and diversify your investing activities.
https://www.youtube.com/watch?v=cBpbs6ONgXA
