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Social trading platforms allow for a trader to take advantage of the trading expertise of a community of successful traders. E-toro is the most popular of this type of system. It allows you to choose to follow a single trader that best fills your trading requirements. You can even choose to follow a portfolio of traders based your parameters. It has a built in trading platform that will copy and auto trade for your account. You can adjust the risk level so that you trade less per trade than those you follow, but maintain the proportion of the trades that they execute.
Origins of Social Trading Networks
Social trading is not a new phenomenon. About 15 years ago when I began my career in day trading I stepped into an office with about 20 traders. I sat down next to one particular trader and watched him trade for several days. I learned how to trade by observing a particular trading method. I soon began to trade on my own and followed the specific rules that I was taught. For me this was the origins of social trading. From following my mentors trades and copying his suggestions based on my own risk level I learned how to trade. It was common on the floor for different traders to call out the trades they would make. We built a room of successful traders by following each others trades and learning from one another on a constant basis.
In later years as the technology improved social trading took the form of subscription packages to services where expert traders would message their tips and trades to subscribers on the network. These systems were expensive and could cost from $100’s- $1000’s per month.
For several years now in Forex and Binary Options traders could subscribe to signals services. Signals are also a form of social trading as expert traders would send trading tips by email or text to customers who would then enter the trades into their trading platforms. Many Forex platforms allow for auto trading where these tips are automatically executed in the traders platform.
These signals packages have become much more affordable as they can be purchased for under $100 per month.
The advent of the new Social trading platforms, such as e-toro, allow you to select from dozens of traders from around the world. They are ranked based on their success rate and categorized based on the type of trading they do as well as risk level and the amount of followers they have.
Binary Options Social Trading
In January 2014 SpotOption, the leading Binary Options platform provider, announced the release of SpotFollow. This new feature is the a Binary Options version of social trading. Also known as iFollow the feature allows you to Copy Trade the top traders. Choose from a selection of traders listed based on their success rate. You can select to copy trade a specific asset or a collection of assets. You can also limit your investment level per trade and overall. The first two brokers to install the new feature are LBinary and Bloombex Options.