Why is social commerce changing the world of investors?

“With us, you benefit from the knowledge of others.”

Quite simply because it gives everyone access to global financial markets. It allows everyone to trade in a simple and transparent way. Social trade gives every investor the opportunity, so to speak, to manage his or her own fund and to control exactly what happens with the money. The idea of a “closed operation” in the investment world is therefore a thing of the past.

Social Trading platforms offer investors a high level of regulation, security, easy access to professional capital markets, risk control and often excellent performance. Find the platforms recognized by millions of investors on the market here

These sites simply offer free access to the capital market, all this sounds exciting, but what are the concrete advantages of social trading compared to a traditional fund?

On these platforms, every investor can see what another investor is trading. In addition: the network is characterized by the social aspect, like Facebook, investors can communicate with each other. They can thus benefit from the knowledge of other users. In this way, investors are part of a swarm of information and use it for the success of their investments. The idea of social commerce defines a new asset class: the user himself. Investors therefore invest in investors.

Thousands of investors follow other investors? How can we follow them and pursue a sensible strategy?For example, rankings help investors to find high-yielding people.

Yoni Assia, founder of the eToro social trading platform

Why should investors ignore the trend and prefer to rely on experienced professionals?

Because fund managers are true capital investment professionals who have considerable specialist knowledge and use it to the benefit of the fund investors. This also includes risk control.

Risk? 

How to ensure risk control in social business? Isn’t it better to gamble than to follow the strategies of many traders and hope for great success?

We have many tools to control risk. For example, investors can only copy another investor’s transactions with 20% of their assets. Investors can also set stop loss limits. And in our opinion, transparency is the safest. We give investors the means to manage their money responsibly.

But doesn’t the trading prospectus encourage investors to engage in risky, short-term speculation?

No, it has been shown that eToro investors prefer to copy traders who have a low maximum circulation (maximum loss from the highest to the lowest on a stock). However, there will always be investors who are looking for risk, even with traditional funds.

Does risk control really work better with funds?

The decisive advantage lies in the organisation of fund companies. For example, we use technical systems and employ several employees who are solely responsible for risk management and control. We have institutionalized this, so to speak.

Why should amateurs perform better in social business than professionals?

Because it works. Several studies prove it: for example, the University of Bochum and the Massachusetts Institute of Technology (MIT) have found that social trading increases returns for investors. By copying successful investors, investors can beat the market and do better than professionals.

But why should an investor trust an anonymous mass rather than an investment professional?

When investors copy popular traders, they are not investing in an anonymous pool. They know their business, they know what they think. Investors can discuss among themselves, everything is transparent. Only one person is anonymous: the manager of a classic fund.

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