Billions Served: And it’s Not McDonalds!
The social media financial trader is no longer stereotyped as a banker, national corporation, hedge fund manager, or retail broker dealing in billions of dollars. The social media financial traders of today are going to their day jobs and coming home to trade online. They are everyday people, including the single, long-haired male in his late 20s. No suit there. He is just an ordinary guy utilizing social media to trade on the same financial platform as the big guys. Unfortunately, he may not have the same tools as the large entities, which assign entire teams to watch the market, and have the coffers to do it. Yet, social media financial trading is establishing a solid trend because its number of users are growing.
Retail FX seems like a small chunk of the entire foreign exchange market at 5 percent, but the daily trading rate is $4 trillion from individual investors and corporations, which are spending millions. Retail FX is electronic trading with tools for all investors, large or small, such as the social media trading platform, the most important tool because it runs up-to-date quotes 24 hours per day on currency for the roughly 12 million Retail FX traders from around the globe. At eToro, 1.75 million of them are individual investors in a community that trades in real time. Retail FX traders follow more experienced traders and copy the trading of others, learn how electronic trading works, communicate with other traders, and develop their own trading networks, all on the platform.
Investors have a Glitch
The Retail FX sector is trending, however, its turnaround rate is staggering. The burn rate of short-term investors is at 70 percent. These are the individuals that invest, lose and close their accounts, never to return. This prompted the trading platforms to identify the main source, the first-time investors that don’t know the keys to building portfolios of substance. The eToro trading platform has pinpointed that these investors neglect to copy the moves of other recommended traders, an exclusive to social media trading. Compared to non-social trade networks, earnings were at least 6 percent better on the social platform because “gurus” led the way, according to the results of an eToro study. The social media part of trading keeps the currency market circulating, and traders are able to choose gurus to follow and copy.
Increased Earnings Potential
To promote the concept, eToro offered a monetary coupon to 6,000 traders in the study. A guru to follow was chosen by eToro. In addition to the 6 to 10 percent increase in earnings, the study concluded social trading is more profitable in the foreign exchange arena at large. Since eToro opened its OpenBook platform, over 60 percent of investors follow expert traders, consult with them and learn to use the social media platform effectively for gain. The platform’s users have created 200,000 accounts at eToro.