How good are lead social traders? Leverate investigates


Social trading platforms have become a much vaunted antidote to the increasing cost of client acquisition and retention, maximizing lifetime value of retail FX traders by keeping them engaged, plus engendering higher trading volumes, due to the ability to automate such platforms to follow lead traders, whilst at the same time adding essential human interaction.

Many firms have recently incorporated social trading functionality within their platforms, and, as demonstrated by social trading platform provider Tradency last month, vice versa.

Leverate was among the first brokerage technology companies to provide an incorporated social trading solution, and has retained data regarding the Sirix social trading network’s lead traders since inception.

The company has today stated that its updated metrics for social community traders make it easy to find masters who combine a high P&L with a measured approach towards risk over a long-term trading window. By modeling these traders, novices are making better trading decisions, and brokers are watching trading volumes rise.

“It’s really exciting watching new members develop by copying veteran traders,” stated Sirix Social Product Manager Lior Gazit. “Even though we had predicted copy trading would help Community members perform better, we were a little surprised by just how well it is working.”

In support of these findings, Leverate released data reflecting the performance of two Sirix Social Community traders. After switching to the new top trader metrics, one of the traders, going by the User Name Watchpennies, vaulted to the Top Traders list, based on his P&L, low risk profile, and lengthy trading history. More surprising, however, was the performance by a novice trader going by the User Name WeiWei, who also managed to make it into the list of Top Traders, while only copying trades initiated by Watchpennies.

“When we see an inexperienced trader perform this well after following a more knowledgeable Master, we know that the copy trading system is performing exactly as we had hoped,” added Lior Gazit.

Indeed, with the onset of the regulatory requirement by many national financial services authorities looming, whereby it is highly possible that lead traders will have to register as financial advisers, it is prudent indeed to ensure that networks are correctly monitored in order to make a smooth transition when the time comes.

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How good are lead social traders? Leverate investigates

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