Currency Trading Goes Social
With Alex Case, product manager of the new social trading platform OANDA fxUnity
Yesterday’s social media trend is today’s bona fide channel of information. For many of us it’s become routine to connect with an ever-widening online network of ‘friends’ to share news, ideas, photos, and pithy observations about life and work. With social media now such a natural part of everyday modern life, it seems obvious that an information-dependent practice such as currency trading would make use of this new channel.
Forex traders rely on timely information to make trading decisions. They gather this information from a variety of sources that, depending on the trader’s level of market understanding and experience, are more or less useful. For example, some traders rely on graphs of previous price movements, macroeconomic news, analysis tools, and detailed market analysis reports to set their strategies.
Now, social networks and globally active media hubs are part of a currency trader’s actionable information mix. As well, social trading platforms like OANDA fxUnity have emerged that let users share information and copy each other’s’ trades in a single click.
The socialisation of market sentiment
OANDA is a leader in forex market technology and innovation, so we view the ‘socialisation’ of trading as a natural area for our participation. We saw that there was a segment of the trading public not being served by the existing platforms designed for more serious, professional traders. In response we built fxUnity as a user-friendly, interactive platform that encourages people to learn trading by actually trading.
On fxUnity, users can trade individual currencies while simultaneously weighing the market sentiment, connecting with other traders, and following each other’s’ trades. A user can view and copy other trades being made on the platform, seek out and add other users as friends, and send messages to one another. Users control all of their own privacy settings within their Preferences, so they can choose to keep their trades hidden from other users, or only share activity with their friends.
Though “going social” may benefit certain types of traders, there are pitfalls to be aware of—above and beyond the usual risks associated with forex trading.
Trading social: know your risks
With the growth in social trading platforms, some forex brokers have begun passing on hidden fees to make users pay for third-party social features they deem as “extras”. Users should read the fine print when registering for a trading account that offers social features. They need to be aware of extra costs that may be charged through inflated spreads. To avoid these unnecessary fees, it makes sense to choose a platform like OANDA fxUnity that is transparent about costs and does not charge extra for features inherent in the platform.
Always be wary of ‘friendships’ established in a social media context. Though most people have good intentions and participate in online communities for positive reasons, it’s impossible to weed out 100% the spammers and get-rich-quick scammers who aim to take advantage of others. OANDA fxUnity users who find another community member’s behaviour offensive may block that person. The platform interface also allows members to report offensive or abusive content to protect the whole community.
When trading socially, there is also a risk of depending too much on the peer community for trading strategies. The goal is to follow and emulate other traders while one develops trading skills, and learns the ins and outs of the currency market. Merely copying the trades of successful ‘friends’ on the platform—rather than copying without the insights behind these decisions—defeats this purpose. Be aware of a tendency to do this and take advantage of the community to discuss the markets and monitor trading sentiment.
Finally, it pays to remember that—unless one is using a demo account—there is real money at stake when trading on platforms like fxUnity. The markets can move very quickly, so users must be careful to never risk more money than they can afford to lose. To protect users from unnecessary extra risks, the fxUnity platform only offers leverage up to 20:1 and limits deposits to 1,000 units of currency.
More information on OANDA fxUnity is available at https://fxunity.oanda.co.uk