Francois Nembrini, co-founder of TopTradr, tells us about how social media is set to change the future of FX trading
Social trading is big business. The industry has seen huge growth since 2010, with the release of numerous new platforms. This explosive demand from retail forex traders has in turn contributed to a level of technological innovation that has benefitted the whole trading community.
That’s where social trading and mobile trading apps stepped in. The developments in financial technology made by FX brokers have helped to advance social trading. In this way, FX trading and social platforms provide the perfect marriage; the fluidity inherent in the FX market has proved a natural match with the real-time, responsive nature of social trading.
TopTradr is such an app, looking to disrupt traditional trading in a simple yet powerful way. At its core, TopTradr allows traders to follow the top performance, start a trend, share tips and learn from each other in a transparent way, linking to both Twitter and Facebook. TopTradr is an evolution of the social trading idea; made distinctive by is its superior ability to evaluate the successfulness of trades, combined with the confidence they have in their users. The algorithm identifies your abilities, captures your performance, calculates your score and gives you a rank. The result is that it creates a leaderboard.
The concept is simple. Those that continue to make profitable trades will steadily gain points and rise in the rankings. If you manage to squeeze your way into the top ten then you could stand to win a substantial premium. The big winners are given their own respective hedge funds to manage of the equivalent of $75,000.
When social trading first launched, some people expressed doubts about encouraging individuals to ‘follow’ each other to share thoughts and ideas, especially with the moral hazards
involved. However, it proved to be rather the opposite as retail traders all of a sudden has been given access to more educational materials, which ultimately have increased their opportunity to make a profit.
By including social media, TopTradr is encouraging open communications between traders with the aim of creating more responsible and consistent traders. This is all based on the fact that on some platforms, you can risk everything, get a ridiculously lucky trade and shoot to the top of the leaderboard in the nick of time. That’s great and it’s how you’d win a contest, but you wouldn’t do that with real money. Instead, TopTradr aims to set up as many realistic barriers as possible.
With a leaderboard based on our TopTradr score favouring performance, risk responsible and consistent trading, the aim is to create more than just a social trading network but to also discover talent, the X-Factor of Forex.
Therefore, this is a model that simply has nothing in common with copy trading as it does not solicit novices to blindly copy “guru” traders but aim to discover risk responsible traders, highlight their trading activity to the community for educational purposes and finally invest institutional capital behind those trading talents.
Moreover, by providing traders with a new kind of interaction tool, this has given them the ability to follow far more sophisticated, or even professional traders, and gain information and insight to help them with their trades. By using social trading networks, traders can quickly get feedback on the trades they are making. For example, if people are starting to ‘like’ a trade, the trader can tell that they are on the right track with their activity. This kind of reassurance can be extremely important, especially for beginners.
Copy my trades – friend or foe?
One of the reasons why copy trading has become so popular is the belief that, at a novice or retail level, it helps overcome the barriers to successful trading. The premise is that everyone benefits if the copied trade is successful, which is unfortunately far from reality, as it is often only the copied trader who gains. There is also a clear issue of reliability, how do you
know that the ‘guru’ you are copying has a much better knowledge of the markets than you do? Without independent verification, it’s impossible to tell, resulting in the danger of users blindly following other traders’ strategies rather than forming their own decisions.
With the majority of social trading platforms basing their model on copy trading, TopTradr has chosen a different route.
Francois Nembrini, co-founder of TopTradr commented: “As a quality trading network, our audience enjoys the challenge of following and executing their own strategies and ideas. Simply put, we want our social trading platform to be a tool for traders to challenge their trading ideas. You will learn nothing by having people copy you and learn even less if you are copying others.”
“Our aim is to discover traders that can become professionals and can manage institutional money. We try those traders on our own capital to build a track record for them in a pro-environment. Since our capital is at risk, it only makes sense for us to focus on building a community of risk responsible traders who understand the trades they initiate. This is not an easy road and our marketing message does not resonate as well as “copy trading stars with fantastic monthly performances”. We however believe that our approach is more responsible and more profitable long term and will also hopefully help novice traders understand how professionals look at the markets.”
“What’s needed is an incentive to improve trading knowledge in the first place and for the right reasons, something that TopTradr is aiming to provide to new traders, by scoring and rewarding them financially when they make consistently smart, low-risk and high yield trades, Francois adds.”
Technology has always played the role of a disruptive force that somehow connects, discontinuities and changes business models, ecosystems or even the world order. Paradoxically, it has sometimes even created a level playing field.
The trading industry as a whole has been disrupted massively over the last 20 years. However,
the biggest changes have been particularly accelerated in the past five years with the introduction of advanced data platforms, algorithm trading, sourcing platforms, social media and new and innovative Fin-tech platforms. As we see the world of online trading gaining traction and algorithm trading becoming more accessible than ever before, we see fantastic new platforms creating new value for traders and investors.
It is safe to say that social trading is important in the way it provides retail traders, whether experienced or not, with access to more educational materials. This also increases their opportunities to make a profit as well as allowing them to interact with other traders around the world, which very much lies at the heart of social trading.
In the way that the Internet broke the first barrier of individuals entering forex trading, social media is breaking down the second with the gap between the large institutions and individual traders being filled with knowledge, and advice being shared through multiple social channels.
For now, social trading networks present a very interesting opportunity. But to play the game correctly, it is crucial to appreciate that these are active online communities and to get the best out of it, you will have to participate; it is no good just watching from the sidelines.
TopTradr, is a social network that brings you all the elements about trading and takes them to the next level.
The conception is to build a community of profitable traders and discover and showcase the best talent; essentially TopTradr seeks to build a community of profitable, risk responsible traders that will learn (and benefit) from one another in a transparent and open environment.