Is Social Trading the Future of Investment?

Social trading segment is prospering, as corresponding trading solutions and and platforms are emerging to cater to retail investors' increasing demand. Over the last few months, multiple financial firms, including Germany-based bank?comdirect ,?Brokeree Solutions , the technology provider for multi-asset brokers and?Vantage , the multi-asset trading platfrom, have launched new social trading offerings successively.

The segment's?market size is expected to grow from $2.22 billion in 2021 to $3.77 billion by 2028; and it is estimated to rise at a CAGR of 7.8% between 2021 and 2028 (statistics from The Insight Partners).?And in 2021, the?global forex?market?reached a value of $702 billion?(statistics from MarketWatch).

What Is Social Trading?

Social trading, which may also be referred to as "copy trading", is a form of investing that enables traders to observe the trading behavior of both their peers and expert investors, and mimic their trading strategies. This trading model connects traders around the world, and provide them with a community to interact with and learn from each other.

Key Players

When it comes to a top-rated?social trading broker, and a social investment network favored by?traders,?eToro ?takes the lead?in the industry.?Its registered users?totaled 28.5 million as of March 2022.?

Other significant market players include?ZuluTrade ,?NAGA ,?Darwinex ,?TickMill ,?Collective2 ,?FX Junction ,?Wikifolio,?Axiory , and?AvaTrade .

Let's take a closer look at?eToro . The broker launched OpenBook in July, 2010, the world's first?social trading?platform, which was phased out in 2015. Two years later, it launched CopyTrader?, with which you can automatically?copy top-performing traders, instantly replicating their trading in your own portfolio.?With this tool,?the minimum deposit required is $200, with the maximum deposit of $2,000,000; the maximum number of traders you can copy simultaneously?is 100.?Besides, its users made a 30.4% return on investment (ROI) by copying pro traders?last year, compared to that of 2020 at 83.7%.

Strengths?& Weaknesses

Strengths

1. Reduce knowledge gap and draw to novice traders

A social trading?platform is newbie-friendly, offering novice traders the opportunity to join a community of like-minded individuals where advice, knowledge, information and ideas can be freely exchanged.?This trading model helps alleviate?one of the greatest difficulties facing new?traders: the knowledge gap, to a certain extent.?It therefore draws to a flood of new individuals to enter the financial market, which in turn facilitates client acquisition for brokers.Read More Here