In 2011, Stockopedia became the first social investment analytics platform. Since then, the social investment industry has exploded with social investment startups popping up everywhere. But what is social investing and how does it benefit traders?

The art and science of stock trading and investing can seem mysterious and unapproachable to laymen. It doesn't help that successful stock traders often pass off their success as the result of some esoteric skill mastered by only a select few. In such a situation, the best a beginner can do is to copy already successful brokers and follow their trades.

This is where social investing comes into the picture.

Social investing is the combination of stock trading and conventional social networking. In an era where everything has a social component, it is only befitting that stock trading too be a publicly oriented, social activity. Just as you can broadcast what you're eating, thinking or doing on Twitter and Instagram, you can turn to social investing platforms to broadcast where you're putting your money in the stock market.

How Does Social Investing Benefit the Average Investor?

Social investing hinges on the "wisdom of the crowds" idea – that is, a large group of people is collectively smarter than an individual. Hence, by analyzing and understanding the investments made by people on a public social investing platform, an individual investor might be able to make better bets. By using a public facing social investment platform, individual investors can also better understand investment trends and place their trades accordingly.

Social investing also allows average investors to copy trades made by more successful investors. Thus, if successful Investor A invests a thousand pounds in a particular stock, Investor B can copy the trade and place his own money in the same stock, thereby increasing his chances of success.

The benefits of social investing, therefore, are two-fold:

  • Follow the "wisdom of the crowds" and understand the general trends in the markets.
  • Copy trades made by experienced investors and replicate their success.

Why Are Social Investing Platforms Like eToro Becoming More Popular?

Social investing is a new field that owes its origin to Tel-Aviv based eToro. The company was founded in 2007 when the success of MySpace and Facebook had pushed a number of technology startups to explore the application of social networking in different fields. Stock trading, due to its secretive nature, was a ripe candidate for disruption via social networking. By making…

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