What is Social Trading?

Social trading has gained prominence among traders in its unique way to leverage the collective expertise of the community and foster a space where novice traders can observe, learn from, and replicate the strategies of experienced traders. By democratizing access to trading insights and strategies, this approach to trading allows participants to benefit from shared knowledge and collective experience.

What's more it blends communal learning with personal autonomy, allowing traders to decide how to integrate the gathered insights into their own trading strategies.

Let's dive in and explore how this works.

How Does Social Trading Work in Centralized Ecosystems?

Social trading, thus far, had primarily been used on centralized trading platforms.

Here's how it works: a beginner trader joins a social trading platform and enhance their portfolio by connecting their account to that of a more experienced trader.

These experienced traders, commonly referred to as "Principal Traders," interact with newer traders, "Followers" on the platform through comments, messages, and discussions. Followers can choose to replicate the trades executed by Principal Traders, potentially reducing the risks and improving their portfolio management strategies.

On the other hand, Principal Traders earn a percentage of the net profit from Followers who copy their trades. Followers can track the performance of Principal Traders, enabling them to make data-driven decisions about whom they wish to follow and replicate.

These interactions have a range of benefits including:

• Ease of Accessibility to Expert Strategies: Followers are able to easily follow and access the strategies of Principal Traders. This democratized approach can potentially reduce the risks associated with trading that newbies may encounter, and enhance their portfolio management strategies.

• Learning Opportunities: Social trading platforms serve as a hub for trading information from professional traders worldwide, facilitating interaction and learning. This not only enhances market insights but also helps build a supportive community for traders.

• Generate a Following for Your Social Trading Profile: By sharing trading strategies and having trades publicly accessible, experienced traders can generate a social following and establish a presence in the trading community. These interactions serve as a means of facilitating productive knowledge sharing between both experienced traders and novice traders alike.

• Real-Time Market Sentiment Analysis: Social trading platforms often aggregate data based upon the trading behavior of users, providing insights into wider market sentiment. Traders can use this information to gauge the overall market mood and make better informed trading decisions.

While social trading has found its place within centralized exchanges (CEXs) with plenty of adoption, traditional social trading, however, is susceptible to the flaws and vulnerabilities of CEXs.

• Unnecessary Added Costs: The involvement of multiple intermediaries may complicate the process and add layers of costs.

• Limited Access: Trader identity verifications and KYC are often required, and the criteria for becoming a Principal Trader can be arbitrary.

• Compromised Security & Privacy: CEX operators have access to a trader's trading history and other confidential information.

Consequently, social trading within the Web2 domain falls short of being the ideal solution for secure and efficient trading.

Where are the Opportunities for Social Trading in a Decentralized Setting?

In decentralized environments, social trading has the potential to thrive, as blockchain technology can address the challenges associated with social trading on centralized platforms while also enhancing the benefits. For example:

• Users Retain Full Control of Assets: This is particularly beneficial for principal traders, as they can manage their strategies and funds with complete autonomy.

• Confidentiality: Unlike in centralized settings, no central authority is privy to confidential information, ensuring complete privacy and security for all traders.

• Publically Verifiable Trading Performance: Leveraging the transparency and legitimacy of the blockchain, a trader's performance — profits and loss (P&L%) and more indicators of their trades can be publically verified by followers and community.

Social Trading on ApeX

As part of our roadmap, as detailed in our Litepaper, ApeX is set to launch an exciting social trading program! With ApeX's Soulbound Tokens, "ApeSoul", at the crux, ApeX's social trading program will give traders complete control over their assets and trades. Eliminating the need for KYC or centralized oversight, ApeSoul will be used to verify trading performance and identify Principal Traders, establishing a transparent and straightforward system for all.

What's more, Principal Traders will have the opportunity to establish a communal vault where Followers can deposit their funds to earn an algorithmically determined share of the net profits upon the closure of a trade. This ensures a fair and easy-to-allocate funds system.

Further, with incentives distributed in the form of a point system, ApeX will reward users for their trading activities and the completion of various other tasks on the platform. These points will reflect on ApeSoul itself, and will be used to determine rewards.

Also, social trading program on ApeX will be integrated with social media platforms such as X (formerly Twitter) and Telegram, to enable participants, especially Principal Traders, share their insigths and achievements with a wider community.

Stay tuned for more details as we roll out this comprehensive social trading program that combines professional trading experience, interactive social elements and rewarding equity incentives.

As the trading landscape continues to evolve, social trading stands as a testament to the power that community and blockchain can bring traders. While it has gained popularity in centralized ecosystems, the shift towards decentralized platforms like ApeX offers a chance to address the challenges faced in traditional social trading. With a focus on autonomy, security, and transparency, ApeX's upcoming social trading program aims to enhance your experience and create a new and exciting way to trade.