The Investment Network: a new approach to Retail Trading
Investment firms had long figured out that assembling a team of traders is far more efficient than conferring their clients’ funds into the hands of single, isolated individuals. Until recently, this has not been the case for retail investors. Even with the advent of online trading, the model of one trader versus the market seemed to remain as the unshakeable standard.
What most retail traders seemed not to realize is that this isolating model put them at a considerable disadvantage. In trading alone at home, without contact with other investors, traders can rely solely on their own skill and experience. That is to say, while investment firm traders could share knowledge, ideas and successes and thereby capitalize on a much larger number of opportunities, the lone trader at home would have to figure out how to invest and what to invest all by him/herself, thereby probably missing out on much of the market action.
What is an Online Investment Network
This is all changing now, thanks to the invention of the online investment network. Trading platforms such as eToro have decided to give traders who are investing online the edge as institutional traders. The online investment network connects people, enables them to share online trading information and even gives them tools to implement collective knowledge into their own online investing portfolio. This concept has given rise to a new way of investing online: social trading.
Social Trading and Investment Networks
Social trading and investment networks are literally changing the financial trading industry in radical ways. It opens the doors to online investing to people who never dared enter the markets before, and gives experienced investors new and exciting opportunities. For example, the aforementioned eToro social trading network enables traders to follow each other’s online trading activity and even copy each other’s trades automatically. This kind of pragmatic application of online trading information means that whenever any one trader figures out how to invest money successfully, his/her success can then ripple through the social investment network thereby benefiting countless other individual investors.
Traders all over the world are realizing the benefits of investing online within the framework of a social trading network. Looking at the eToro investment network alone we see that it is already 1.75 million traders strong and growing by the thousands every day. What’s more, the benefits of social trading are manifest. Since the launch of their OpenBook investment network, eToro has seen a huge rise of 20% in overall trader performance, proving that online trading will never be the same.
As a result, online investment networks are popping up all over the world wide web, and soon a lone trader practicing online investing without the support of an investment network will become a rarity. And yet, when we see the benefits traders are reaping from social trading, I do not think anyone will be looking back on the good ol’ days with any kind of nostalgia.