In order to fully understand Social Trading‘s characteristics and the capabilities, we must first learn about its history and its evolution.
Before Social Trading there were Mirror Trading and Copy trading, but first and foremost there were the simple emails. Yes, we can say that emails have created the conditions of the evolution history of Social Trading, up to its present shape.
Originally, some traders communicated to their followers their intention to open or close certain operations at certain levels, through the use of newsletters. When they wanted to open a trade, an e-mail was sent, and all members of that service opened the same trade independently. Then the same procedure for the closure. A communication was made to the mailing list, and everyone closed their positions.
Later the first trading room began to appear. The concept was more or less the same. The trader communicated the execution of a trade, but instead of using the e-mail, he wrote it in a virtual room where the followers were able to read and replicate.
Later, with the evolution of chat room, they could also comment or ask questions live. Obviously, everything implied a constant presence in front of the computer and, in most cases, the payment of a fee to use the service.
An historical turning point: the automatic replication
At that point, some brokers and businessmen began to realize the potential that could be generated if they were able to create a replication system, but this time automatic, where a single entity could generate the trading signals, and all the other parties linked to it could replicate them automatically on their trading accounts, with no longer the need to follow or to constantly monitor email or trading room.
The merit of having initiated the real Social Trading history goes to the company Tradency. In 2005 they proposed the first autotrading system, called by them Mirror Trader. A trader could host his own trading strategy on the Tradency systems, provided he supply a long enough record with the performance of that strategy. At that point, if the strategy was accepted, the Tradency customers could observe the data of that strategy, and, if interested, could decide to mirror-copy on their account all the transactions generated from that strategy.
Another important step forward in the history of Social Trading was done by companies like Zulutrade and Etoro. Traders no longer had to submit their strategies in order to be approved and used. It was enough that the traders had connected their personal trading account at the Zulutrade platform, and from that moment each of their action was recorded and made available to the investors users for consultation.
As for the Mirror Trading of Tradency, the new system allowed investors users to check the work and history of the traders on the platform, thanks to new analysis methods and, if interested, to copy on their account the transactions made by that trader on his own account. Hence the term Copy Trading.
Last chapter… but the Social Trading’s story continues
It was an important step, because this way the first real and direct interaction between the user which provides the signal and the user who replicated it was born. The last step of this story came shortly after.
Why not allowing the investors who are making Copy trading to interact with each other, to exchange opinions, to leave comments on the actions of a trader and vote him? Why also not allowing the use of Social Network, connected to the whole Copy Trading business?
Here was born Social Trading.
But of course, the story doesn’t stop here.
Social Trading is constantly evolving. Companies are expanding and new ones are emerging, there are new and more innovative services (for example just have a look at the new eToro CopyPortfolios), the quality of the service is improving steadily, and the general competition drives the whole industry to improve.
If it’s true that we are destined to be more connected with each other, then Social Trading will do its part, and investing will be more and more affordable for everyone.
This story has just begun, and InvestinGoal is here to write it with you.