Hey,
I found two interesting studies about social trading (eToro). They examined data from social trading platforms and give an evidence for social trading.
The first study is from the MIT Media Lap in Cambridge by Wei Pan, Yaniv Altshuler and Alex (Sandy) Pentland. In their study they discover that generally social trades outperform individual trades.
Here is the Link to the paper: Decoding Social Influence and the Wisdom of the Crowd in Financial Trading Network
The second paper is from the university Bochum in Germany by Neumann, Paul and Doering. They showed that social trading is similar with investing in small money hedge funds.
Here is the Link to the paper: A Primer on Social Trading – Remuneration Schemes, Trading Strategies and Return Characteristics
I found two interesting studies about social trading (eToro). They examined data from social trading platforms and give an evidence for social trading.
The first study is from the MIT Media Lap in Cambridge by Wei Pan, Yaniv Altshuler and Alex (Sandy) Pentland. In their study they discover that generally social trades outperform individual trades.
QuoteDislikedWe discover that generally social trades outperform individual trades, but the social reputation of the top traders is not completely determined by their performance due to social feedback even when users are betting their own money. We also find that social influence plays a significant role in users’ trades, especially decisions during periods of uncertainty. We report evidences suggesting that the dynamics of social influence contribute to market overreaction.
Here is the Link to the paper: Decoding Social Influence and the Wisdom of the Crowd in Financial Trading Network
The second paper is from the university Bochum in Germany by Neumann, Paul and Doering. They showed that social trading is similar with investing in small money hedge funds.
QuoteDislikedUsing a unique data set comprising transactions from four social trading platforms, we find that following traders on social trading platforms is similar to investing in a small money hedge fund. Returns on social trading platforms are characterized by negative skewness and leptokurtosis. In contrast to hedge funds, however, we find no evidence for the hypothesis that these characteristics can be attributed to the use of derivatives, but to the trading behavior of signal providers.
Here is the Link to the paper: A Primer on Social Trading – Remuneration Schemes, Trading Strategies and Return Characteristics