Social media's impact on businesses has become an intensely discussed topic, but many businesspeople and investors are still searching for some clarification: OK, you have a Facebook profile, but how does it help you? How are you, as a consultant, trader, broker or any type of business person managing to turn these new tools into your advantage?
More than 70% of financial advisors have a personal or business Facebook profile and 55% are now on LinkedIn, a 2011 survey by American Century Investments shows. This is a clear sign social media already plays some role in the financial sector. The potential is though huge. If on Facebook or LinkedIn millions of people gather to share their likes, dislikes or recommendations, niche social networks managed to take this phenomenon to the next level, by focusing on a sector that depends enormously on Internet: retail forex trading.
These platforms were more than a simple forum, the first method of interaction between traders. A well-rounded network provides much more than a forum, it includes education, expert analysis and ideally also a way to specifically connect with other investors who have a similar trading style. And automatically increases traders' trust.
Retail currency trading now accounts for up to 10% of a market that reached 4 trillion dollars at the end of 2010, according to the Bank for International Settlements (BIS) data, a huge growth in only a few years when this investor segment appeared.
The debate on the internet around this topic has become quite fierce: pip, drawdown, NZD, JPY, stop-loss, HUF, CHF, hedging, Fibonacci - all these terms suddenly entered the novice trader's vocabulary, so it was only a matter of time for the topic to reach social networks. Now, as the first step was made, we are rapidly getting to the moment when all big corporations and brokers embrace the domain.
Traders are able to use a set of tools that create a clear image of their trading style and results, they are finally able to compare, talk, debate, and ask advice from multiple sources. They can find a better trading method, rapidly adjust to market changes and find new strategies when former trading techniques fail to be as effective.
Brokers now know they can easily increase their number of clients and social networks are a door that can be opened for a new type of investors: the new client target is a younger, less wealthy and even less financially educated than the traditional investors banks and brokers were generally trying to attract. They now understand that it may be more profitable to have a long-term relationship with their clients and that is exactly what the social networking platforms help them reach. These platforms offer all the facilities for them to enter the market: a community they can easily integrate in, educational material and direct interaction.
Brokers can not only reach these groups which were probably unfamiliar with, but they can attract communities from emergent, far-away countries from Asia or India and foreign language speaking nations. And more over, through automatic trading programs like Tradebook, the chances for these inexperienced investors to actually make a profit out of their investment increase significantly, which makes forex trading even more attractive.
Although an investor's Facebook or LinkedIn profile hasn't yet proved to directly boost his profit, social media is more about creating a brand a connecting with an audience impossible to access in the past. Social network is an exceptional relationship tool helping brokers create trust relationship with their clients while increasing their own volume and reducing the price of capturing new clients.
Because at the end of the day you can develop as much software on your platform as you want, but what will make it grow is the community.
FxStat is an innovating service for both experienced and novice forex traders, providing a wide range of new tools and information specifically meant to improve trading strategies and results. A completely secure and transparent platform, FxStat allows investors to analyze traders' strategies as well as their own performances, socialize and make new connections and get first-hand information about the forex market. With its latest launched automatic trade service, Tradebook, members have access to the first real-time auto-trading facility.
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