While there are indeed some online trading platforms which are explicitly marketed as social trading platforms, there are many more which assume the form of social trading platforms but aren’t officially referred to as such. For instance, one of those out-the-box discussion forum sites which have been modified and customised to operate as a forums over which to discuss trading, makes for an example of what is effectively some social trading going on, even though no money changes hands in a manner which is directly related to trading. It could very well be a free platform too, like many of them are, where people just share some news with regards to stock picking tips, what the markets rumour mill has on the go, and which stocks individual contributors are perhaps contemplating taking some positions on.

So the rise of social trading with that indirect aspect of the practice is much, much bigger than what one might have initially thought, but I’d like to turn my focus onto the more direct and explicitly defined practice of what social trading is and just how high up it appears to be rising.

What is social trading?

I’ve perhaps already implicitly explained what social trading is via my referral of some examples discussed, but to give it an explicit definition, social trading in the true sense is when securities trading ideas and strategies are shared amongst a group of two or more people, ideally with the intention of having the advisee(s) copying that trade.

Why social trading is growing increasingly popular

Social trading has been growing increasingly popular for quite a while now, to the extent that it has been formalised by some of the biggest online brokers in existence, mostly as a means through which to ensure they take full advantage of the implicit, additional revenue streams. I mean if an online broker knows that a few of its clients are getting together to discuss the markets, they might as well be the ones to extend their platform to include that functionality, right?

Social trading continues to grow in popularity though because it also gives what would otherwise be just another average trader trying their luck with the markets a chance to establish themselves as an authority in this niche. Being known as someone who picks out some of the best-performing trade positions sets you right up to create additional revenue streams, such as charging for your time as a consultant, perhaps.

Emerging social trading trends

Most of the savviest traders who are part of a social trading platform would proceed to open up an account with more than one CFD trading broker as a demonstration of their market astuteness. This speaks to one of the fundamentals of how the markets work, which is the impact of a large group of traders’ trades on the market as a whole. Sure, your entire social trading circle will probably only cause a blip in the market at best if they all took the same position with regards to certain shares, but then again there could be millions upon millions of other social trading groups doing exactly the same.

Having a trading account with a different broker then puts you in line to take advantage of trading techniques such as hedging.

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