Social Trading Methods - Pros and Cons
In today's article, I am going to introduce Social Trading from the technical side - what are the different methods of Social Trading, what are the advantages, disadvantages and threats.
Social trading - available methods
To put it simply - Social Trading methods can be divided into two types:
- Available only for the given broker,
- Publicly available to a wide audience.
The former are managed accounts called accounts MAM / PAMM. The second is all kinds of signals sent via the Internet - MQL5, Autotrade, Signalstart, xSocial etc .. Both solutions have their advantages and disadvantages.
MAM / PAMM accounts
Advantages | Disadvantages |
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The signals sent via the Internet are additionally divided into two categories:
- subscription (signals MQL5, Signalstart)
- with additional costs when opening the position (Autotrade).
Subscription signals
Advantages | Disadvantages |
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Signals with additional costs
Advantages | Disadvantages |
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Social Trading - Summary
There is no perfect method. Each of them has its pros and cons. If you value convenience, you cannot control VPS and platforms, and paying several dozen percent of the profit commission to the manager does not bother you, a MAM / PAMM account will be a better solution for you. If you can devote more time to Social Trading, you can analyze the supplier's history and choose the right signals, MQL5 or Signalstart are the source for you. However, if you want carefully selected strategies at the expense of larger commissions that may result in a worse result than with the manager, look at Autotrade.
Do we have any legal interpretations of social trading in 2018r? Mforex claims: Signals functionality in the mForex Trader platform is not an investment advisory service specified in the Act on Trading in Financial Instruments of 29 July 2005.
And others:
The phenomenon of "social trading" has already been noticed by the European financial supervision ESMA. - The supervision indicates that the operator of a medium (e.g. a website) that enables transactions to be concluded on the client's account - without the client's interference based on signals issued by third parties - provides services with the characteristics of asset management. But the asset management service will no longer be a service that will require the customer to confirm each transaction has been concluded or to specify the parameters of the transaction by the customer each time. On the other hand, the activities of people publishing signals may bear the characteristics of issuing general investment recommendations, says Rafał Wojciechowski, attorney-at-law, director of the Capital Market Law Department at Sadkowski & Wspólnicy law firm.
Hello!
Unfortunately, we don't have anything like that. Doubts are there, and not from today. ESMA, ESMA, but social trading has been present on the market for many years. On the market, in addition to websites where social trading is an addition, such as MQL Signals, there is even a broker that specializes in this - eToro. Works under a Cypriot and British license.
On the other hand, at one time TMS, under the Go4x brand, created its social-trading site, which was irretrievably closed as soon as doubts began to multiply.
"I know I don't know anything" ... 😉