Asia is seeing a rapid growth of social trading and it would be interesting to know what’s happening in that part of the world.
It is estimated that Asia-Pacific (excluding Japan) will count for 26% of the world’s financial wealth by 2019, compared to 21% in 2014. With the improving wealth, more Asian investors are embracing more investment risks. This is backing appetite for non-traditional financial products such as forex and indices that are offered on online social trading sites.
Social trading platforms are online portals that enable traders to interact with other investors, mainly to exchange ideas with the hope of maximizing returns and lowering risks. Many social trading platforms also offer a tool that allows members to automatically copy investment strategies of more skillful and successful investors on the platforms. This is what has given way to automated copy trading.
In automated copy trading, you just make settings in your account so that you add to your portfolio what the pros are picking and drop what the pros are pruning. With automated copy trading, you can reshape your portfolio without having to be there when the pros are doing their selection. Some platforms charge a commission for allowing investors to copy the moves of the more experienced and accomplished traders, others just allow you do it for free.
In Asia, automated copy trading platforms are gaining rapid popularity because they help investors in the region to solve many investing challenges. New investors usually have a difficult time choosing investment products that would produce the returns they seek and many are risk averse. Therefore, for new investors, the idea of simply copying the strategies of an expert trader eliminates the headache of trying to analyze the markets and boost investing confidence.
Cutting investing costs
The rise of automated copy trading platforms in Asia is also linked to the growing desire by investors to keep their trading costs at a minimum. As such, the online trading platforms are winning the hearts of Asian investors who are feeling fed up with expensive services of traditional financial advisors and money managers.
Variety of products
The fact that social trading platforms offer a variety of investing products is another reason they are attracting a huge following in Asia. You can trade forex, including cryptocurrencies such as Bitcoin, Peercoin and their peers on these platforms, in addition to more traditional assets such as stocks, bonds, and commodities.
Growing disposable incomes
Providers of social trading platforms are targeting Asian markets at a time when the region is seeing a rapid rise in personal disposable incomes. Asia-Pacific’s private wealth is projected to grow at the compound annual growth rate of 11% between 2014 and 2019. As such, private wealth in the region is seen rising to $55 trillion by 2019 from $33 trillion in 2014. The estimates exclude Japan.
Trouble in Eurozone
The rise of copy trading in Asia can also be linked to the economic uncertainty in Europe following Brexit vote and Russia’s aggressive foreign policies. Asian investors who once looked to Europe and the U.S. to grow their wealth may be feeling scared and could be redirecting their focus to investment alternatives offered at home, leading to growing uptake of social trading services because they provide exposure to a variety of products and trading can be executed conveniently.