FX Trading is Getting up to Speed with Social Media
Social media is changing the way we live, work and play. But it’s not just teenagers and nerds who are signing up to Twitter and logging on to Facebook. Traders are also taking technology to their hearts … and it’s changing the way they trade, now over social media.
CEO and Founder of the globally successful FX broker eToro, Yoni Assia believes that social media has been instrumental to the success of his business and continues to inspire change. He said: “Social media has changed the way people connect and interact with each other. The vision is to give every person access to the world financial markets through a transparent and user friendly platform, which offers full control over your investments at any given time.
“By harnessing the wisdom of the crowds users are able to form smarter investment
decisions,” says Assia.
Log In For Longer
Social media is also helping traders remain logged in for longer, keeping them on top of market movements whilst building a network around them to provide support, especially in times of distress. Retail FX is huge business, turning over a daily sum in excess of $200bn – a significant slice of the $4trn global daily market average. Brokers simply cannot afford not to ensure that their platforms are accessible and social media friendly on a number of different mobile devices.
Watching other traders interact with a broker and experience success obviously carries value for the organisation but for Hayel Abu-Hamdan, head of business development at MIG BANK, the demands of social media users ensure that the experience is mutually beneficial. He said: “In the FX context, education satisfies the novice trader’s immediate need to learn how to get trading, so it sells itself. More subtly it places the education provider in a position of expertise which is a different relationship to the customer-salesman relationship. Most people question the motivation of a salesman but are willing to accept information from someone we see as an expert.”
Most brokers now not only offer many currency trading platforms accessible from a multitude of platforms, along with a comprehensive package of tweeting analysts, interactive forums and support networks.
The notorious difficulty of making money from such a volatile and liquid market as FX means that many traders who sustain big losses are put off ever glancing at a candlestick chart ever again! On average over 70 percent of traders lose money and the industry churn rate –the speed at which the market chews through bright-eyed hopefuls –stands at roughly 30 percent. Attracting clients is a major challenge for brokers, especially at a time when volumes are as low as they are currently. Thanks to the caution with which consumers approach ‘hard selling’ in the wake of the debt crisis, a new and more inventive approach must be taken.
Hearing about successes and losses without prejudice or the pressure of creating an account creates a whole new trader-broker dynamic. OANDA’s Alfonso Esparza, market analyst said: “Transparency is at the heart of communication and social channels have changed the way and speed of our personal and business communications. Retail forex made it possible for non-institutional clients to trade spot forex, in the process making forex more social.”