Social Trading 2012

The success of Facebook, twitter and YouTube is expanding at a rapid pace also in the financial world. Private investors to act on social networking sites and publish their trades for everyone. The result is a completely new way to invest.

So far, there is still faced with the common opinion, that trading is only for the professionals in banks and investment companies. Finally, they have the greatest density of information, have more or less in real-time access to it and are often tied into a worldwide team of experts, The input data for the evaluation and analysis provides. Recent studies, however, again confirmed the current opinion, that very few fund managers beat their benchmark index permanently.

First of all stock market in troubled times, it seems to be especially difficult for investment professionals to, to make the right decisions. Based on ten or. twenty years it is possible only less than one-third of actively managed mutual funds, outperformed the benchmark index cut. It is not surprising, that the investment professionals in the financial services institutions more and more competition from investors grows, the online investing in so-called social networks successfully.

Social Trading

Social Investing-Plattformen, as etoro (see also the promotional video of etoro Germany) are the latest since Facebook now widespread and allow traders, to act transparently and after registration to benefit from the experience of other traders. This happens not only in the discussion process, but the actors put their trading activities, to complete, make it clear to everyone in real time to understand.

In addition, the main parameters of the track records of a trader visible, not only its average return, Investment strategy and investment portfolio, but also the risk, which he received for. The resulting rankings of the same platform at first glance, those of the fund industry, but they are much more individual - the private traders, which now indirectly manages the money of other private investors, is considered, not a team - and they have implemented their own money.

The central theme of the investment decisions: Quality – Risk – Yield

The quality of risk / reward and communication of a successful trader is also documented by the number of his so-called copy, also jener Trader, the investment decisions accurately reproduce. The quality of provision, as a result of individual consent, has been a very effective indicator of investment decisions
a trader's proven.

Time and again, financial experts predicted at the start of our social investing platform, models that transparency will not work in money matters: "One does not speak about money." Apparently so, you can share it like other. Meanwhile, eToro worldwide as the largest trading network has more than 1,7 Million users, 70.000 Trader
are almost daily real active in the markets, and in 140 Countries.

Social Investing, this really just learning to- information and selection processes and is not based on self-fulfilling prophecies, can be implemented expediently only in highly liquid markets. These are primarily foreign currency, Raw materials and major stock market indices. Accordingly, most social investing platform active in those areas. The traders may already 50 U.S. dollars to open an account, allowing the entry of private investors with a smaller budget. Not so experienced traders have the opportunity, improve on a demo account and e-learning formats, and without their knowledge to practice risk.

"According Etoro study improved the results of the trader 10 up to 100 Percent.
The share of profits over losses increased by 8 to 12 Percent. «

Does the transfer of information really? Is there an "invisible hand" to the Social Investing? Beyond the scientific review and the sheer numbers made me personally a testament to the efficiency of social networks particularly impressed. When the earthquake and subsequent tsunami of Japan in the spring 2011 afflicted, is the social network works as a ghostly seismograph. Immediately after the start of the disaster, before the terrible news was hunted like wildfire over the large agencies such as Bloomberg and Reuters in the World, appeared in the eToro network activity is dramatically increased as the dollar / yen trading.

Those: Etoro Website

At eToro a trader can follow present a maximum of ten traders and not longer than allowed 20 Percent of its assets to a single "guru" to use. Furthermore, no longer than 20 Percent of assets are in a single trade-invested position. This will ensure, to diversify their portfolios in the user sufficient. Also copy the trader can always opt out of the trade to be close or even single order or re-
others continue.

Wisdom of the masses

Initial observations confirm, that can be improved through the actions in a social network that results. Comparisons between normal commercial transactions and commercial transactions, were performed using the Copy function Trader, found eToro, that counterfeit transactions both have better success rates and higher average profits per trade. Results The results of the traders improved between 10
up to 100 Prozent. The share of profits over losses increased by 8 to 12 Prozent.Percent

Information selection

This observation can eToro check through his participation in a research study. The study will be at the Media Lab at the Massachusetts Institute of Technology (WITH) performed and analyzed as part of the "Workshop on Information in Networks" (WIN) der NYU Stern School of Business, how information in social networks influence social processes and economic outcomes. This is the field of interdisciplinary research on social computerized systems used by different disciplines and using, including computer science, Economics, Physics and Political Science, analyzed, as the spread of information in dynamic networks work.

Social Trading supports the viral spread of potentially valuable information and thus acts as a filter, which only allows for the dissemination of valuable information. According to the studies of Dr. Altschuler, senior scientist at the MIT Media Lab of the study, , the conditions, take place under which the two processes described, be calculated mathematically. Providers of social knowledge trading platforms are the patterns of behavior of traders and operation of information dissemination can, to develop new tools and systems for their users. First results are expected in about six months.

“Once people give insight your trading activity, share it with other trading income, it can cause, that a considerable prosperity for the entire trading community will be achieved. eToro OpenBook provides exactly this. “ Reuters writes

Conclusion

Through social networks, new markets, is provided in which collective knowledge for the benefit of all participants are available. These markets are open, transparent, extremely effective and liquid. They meet the needs of depositors, to take more responsibility for their investment and actively participate in the markets. The potential is enormous and Social trading involves the ability, to revolutionize the financial markets.

Author: Johnathan Assia
Those: dwpbank transaction 2011/041
Etoro Website