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Social trading – Is it a free for all?

14 February 2014

Committed traders spend thousands of hours absorbing, processing and acting on market information. “Social” empowers them to post, receive, and thus exchange information, 24*7 with others around the globe.

P2P is THE new paradigm. Unsurprisingly, traders have embraced P2P with gusto.

Social and traders: isn’t this exciting? How about Social trading / Copy-trading / Auto-trading / Mirror trading??

Here’s our take! (Hint: knowing that trading is Intellectual Property, you won’t be surprised!)

Social trading & collaboration

Trades are a time sensitive IP produced by hard to acquire trading skills: knowing a good trader’s current market outlook, or the trade that he just placed is VERY valuable information.

On this account, “social” holds promise. Trading rooms & clusters of “Twitter traders” have formed on a validated psychology principle: group beats individual decision-making. Your information helps me; my information helps you, it’s a win-win, “social trading” here we go!

Collaboration is everything in social trading

 

 

 

 

 

 

Almost, but not quite!

Social trading = free for all?

There’s this tiny little thing: for this to work, my contribution has to be as valuable to you as your contribution is valuable to me.

Otherwise, imagine this conversation between Trader Johnnie and George “Quantum” Soros in 1992. Johnnie, who just placed his first ever trade, reaches out: “Hey George, I’m a trader, you’re a trader, let’s social trade: I’m long the GBP, any thoughts?”.

Absurd, and therefore unlikely! Animal Farm’s unforgettable Napoleon summed it up:

Animal Farm and social trading

 

 

 

“All traders are equal, but some trades are more equal than others”

 

 

 

Free “Social trading” as described above = barter. Barter works… AS LONG AS all parties to it exchange equally valuable contributions.

Luckily for George, trading is an IP industry: no amount of Johnnie trades are of interest to George (this is not to say that knowing ALL trades by ALL Johnnies at any point in time wouldn’t!). Barter and IP are difficult soul-mates: a sustained IP exchange where a trader consistently contributes above average only works if he really likes philanthropy: the communist trader – a very strange creature, indeed!

Social trading – our take

“Social trading” would work IF all traders had similarly valuable IP to contribute. But they don’t. The moment a trader contributes more than he gets, his incentive is to walk. Once he does, the second best trader, who also contributed above average and now also lost access to the best trader’s IP, follows suit. This triggers a race to the bottom that soon becomes noise. At its worst, this is Twitter for traders. Everyone has trades to tweet, alas not all trades are equally valuable.

Social trading – what’s next?

Barter is not the way to exchange valuable information: this ignores the dynamics of intellectual property. Existing “social trading” propositions fall short on this account and thus have flaws that greatly outweigh their benefits to good traders. What’s worse, they’re a self-selection magnet for all sorts of bad stuff that smart traders should best stay away from. Groucho Marx knew when he said: “I wouldn’t join a club that admitted me as a member!”

At Darwinex, we know that, given the right set-up, good traders have valuable IP to contribute, and can benefit from collaboration. Our investor platform is already in private beta, so stay tuned!

 

Last News

General Election in Japan (22 October 2017)

18 October 2017

Please note that the Japan General Election is coming up this Sunday (22 October 2017). The outcome of the election could result in market gapping in JPY pairs when market opens. Please make sure you are comfortable with the open position exposure on your Darwinex account and that you have sufficient margin cover going into the weekend […]

Please note that the Japan General Election is coming up this Sunday (22 October 2017).

The outcome of the election could result in market gapping in JPY pairs when market opens.

Please make sure you are comfortable with the open position exposure on your Darwinex account and that you have sufficient margin cover going into the weekend prior to market close at 22:00 (UK time) on Friday (20 October 2017).

As always, at info@darwinex.com we’ll be glad to assist you!

 

End of Daylight Saving Time in Europe (29 October 2017)

Please note that Daylight Saving Time ends in Europe on Sunday 29 October 2017 but our MT4 server time is NOT changing until Sunday 5 November 2017 (when Daylight Saving Time ends in the US). This means that there will be 1 week (29 October through 3 November 2017) where markets will open 1 hour earlier in GMT time […]

Please note that Daylight Saving Time ends in Europe on Sunday 29 October 2017 but our MT4 server time is NOT changing until Sunday 5 November 2017 (when Daylight Saving Time ends in the US).

This means that there will be 1 week (29 October through 3 November 2017) where markets will open 1 hour earlier in GMT time (i.e. FX market will open at 21:01 GMT instead of 22:01 GMT; commodities will open at 22:01 GMT, etc.).

Trading hours will return to normal from Sunday 5th November 2017, allowing for the daily candle to close at the end of trading in New York each day which is widely considered the end of the trading day.

As always, at info@darwinex.com we’ll be glad to assist you with any question you may have!

 

And the DarwinIA winners are…

4 October 2017

The September edition of our DarwinIA trading challenge came to its end. Below you can find the 48 winners of our € 4,000,000 notional allocation for a 6 month period. Puesto DARWIN September´s notional allocation 1º $FTT € 300,000.00 2º $KLV € 250,000.00 3º $XTT € 210,000.00 4º $FTAL € 170,000.00 5º $CEM € 150,000.00 […]

The September edition of our DarwinIA trading challenge came to its end. Below you can find the 48 winners of our € 4,000,000 notional allocation for a 6 month period.

Puesto DARWIN September´s notional allocation
$FTT € 300,000.00
$KLV € 250,000.00
$XTT € 210,000.00
$FTAL € 170,000.00
$CEM € 150,000.00
$VTJ € 140,000.00
$VQB € 130,000.00
$CLA € 120,000.00
$WPB € 110,000.00
10º $QJW € 110,000.00
11º $FGC € 110,000.00
12º $PUL € 100,000.00
13º $GTD € 100,000.00
14º $RZV € 100,000.00
15º $PGH € 90,000.00
16º $YBG € 90,000.00
17º $FEG € 90,000.00
18º $OOA € 80,000.00
19º $JZH € 80,000.00
20º $EWL € 80,000.00
21º $MBC € 70,000.00
22º $PPP € 70,000.00
23º $LZL € 70,000.00
24º $QTB € 70,000.00
25º $VNE € 60,000.00
26º $VLD € 60,000.00
27º $NIC € 60,000.00
28º $KKH € 60,000.00
29º $XMZ € 60,000.00
30º $VGC € 60,000.00
31º $XIS € 50,000.00
32º $XYP € 50,000.00
33º $RQH € 50,000.00
34º $AXF € 50,000.00
35º $YZF € 50,000.00
36º $ZMA € 50,000.00
37º $JJT € 50,000.00
38º $BAD € 40,000.00
39º $SPI € 40,000.00
40º $JKC € 40,000.00
41º $IOG € 40,000.00
42º $HIB € 40,000.00
43º $ICX € 40,000.00
44º $NLK € 40,000.00
45º $LSC € 30,000.00
46º $ELD € 30,000.00
47º $VVC € 30,000.00
48º $AWE € 30,000.00

Unofficial referendum on Catalonian independence (1 October 2017)

29 September 2017

The unofficial referendum on Catalonian independence is due on 1 October 2017 and some analysts are forecasting losses for the EUR currency as nerves over this potentially disruptive event grow. There is high uncertainty around the outcome of the unofficial referendum, which may result in market gapping in EUR pairs when market opens on Sunday. Please […]

The unofficial referendum on Catalonian independence is due on 1 October 2017 and some analysts are forecasting losses for the EUR currency as nerves over this potentially disruptive event grow.

There is high uncertainty around the outcome of the unofficial referendum, which may result in market gapping in EUR pairs when market opens on Sunday.

Please make sure you are comfortable with the open position exposure on your Darwinex account and that you have sufficient margin cover going into the weekend prior to market close at 22:00 (UK time) on Friday (29 September 2017).

As always, at info@darwinex.com we’ll be glad to assist you!

Darwinex Amended Trading Hours for German Public Holiday (3 October 2017)

28 September 2017

Please note the amended Darwinex trading hours for the upcoming Bank Holiday in Germany on 3 October 2017 (all times are in UK time).  Instrument Trading Hours  FX 22:05 Mon – 22:00 Tue   DARWINS 22:05 Mon – 22:00 Tue  COMMODITIES   Gold 23:00 Mon – 22:00 Tue Silver 23:00 Mon – 22:00 Tue Platinum 23:00 Mon – 22:00 […]

Please note the amended Darwinex trading hours for the upcoming Bank Holiday in Germany on 3 October 2017 (all times are in UK time).

 Instrument Trading Hours
 FX 22:05 Mon – 22:00 Tue
  DARWINS 22:05 Mon – 22:00 Tue
 COMMODITIES  
Gold 23:00 Mon – 22:00 Tue
Silver 23:00 Mon – 22:00 Tue
Platinum 23:00 Mon – 22:00 Tue
Palladium 23:00 Mon – 22:00 Tue
US Crude 23:00 Mon – 22:00 Tue
Natural Gas 23:00 Mon – 22:00 Tue
 INDICES  
Australia 200  23:00 Mon – 22:00 Tue
 Europe 50 23:00 Mon – 22:00 Tue
France 40 23:00 Mon – 22:00 Tue
Germany 30* Closed
Spain 35 08:00 – 19:00
Japan 225 23:00 Mon – 22:00 Tue
UK 100  23:00 Mon – 22:00 Tue
 US SPX 500 23:00 Mon – 22:00 Tue
 US Tech 100 23:00 Mon – 22:00 Tue
Wall Street 30 23:00 Mon – 22:00 Tue
*Amended Darwinex trading hours.

As always, at info@darwinex.com we’ll be happy to assist you!

General Election in New Zealand (23 September 2017)

21 September 2017

Please note that the New Zealand General Election is coming up this Saturday (23 September 2017). Voting closes at 8 am (UK time) and preliminary results begin to roll in in real-time immediately afterwards. The Electoral Commission’s target is to have 50% of polling station results available by 11 am (UK time) on election night and […]

Please note that the New Zealand General Election is coming up this Saturday (23 September 2017). Voting closes at 8 am (UK time) and preliminary results begin to roll in in real-time immediately afterwards. The Electoral Commission’s target is to have 50% of polling station results available by 11 am (UK time) on election night and 100% of results available by 12.30pm (UK time).

There is high uncertainty around the outcome of the election, which may result in market gapping in NZD pairs when market opens.

Please make sure you are comfortable with the open position exposure on your Darwinex account and that you have sufficient margin cover going into the weekend prior to market close at 22:00 (UK time) on Friday (22 September 2017).

As always, at info@darwinex.com we’ll be glad to assist you!