Question

Can social trading replace traditional   solutions   such as hedge funds?   What factors determine the boundary of this model?

Answer 1

Social trading is form of investing in which the novice trader will be looking at the trading strategies of expert traders and they will be trying to copy them and it is touted as a alternative of the the traditional solution like hedge fund.

NO, I do not consider it as an alternative because this is resulting into very high risk because these strategies are related to coping upon the others strategy and not learning upon the self strategy and it can be disastrous in the long run because market is not that stable at all the the cycles so it can lead to complete erosion of the portfolio in adverse economic cycle and it would also lead to exploitation of the retailers money by the expert traders easily.

I will also advocate that this social trading is just a theoretical model because once the money is invested into the market there is a very high risk relating to erosion of the money and it would lead to a model where money is easily transferred from the poor to the rich and there will be more inequality of income and it will lead to promotion of gambling and quick money which can destroy a large number of portfolios and it can you can lead to investors going bankrupt so I do not prefer social trading over traditional methods.