Social media impact in the UK is not limited to personal matters only, but also in forex trading. How come? Let's find out the answer in the article below.
Forex trading probably isn't the first thing that appears in your mind when you think about social media. Although it seems odd, social media has influenced almost every aspect of our lives, and trading is no exception.
The appeal of social media has influenced many vital businesses in the world's most powerful countries in the past few years. There are approximately 57 million social media users in the UK alone, and nearly 300k of them are online traders.
Aside from revolutionizing the way people communicate, social media has also made its way to the financial world, particularly the currency markets. In this article, we'll analyze the impact of social media on forex trading and how it has transformed the way traders approach the market these days. More specifically, we'll be focusing on the UK as one of the top financial hubs in the world.
How Does Social Media Impact Forex Trading in the UK?
If you're on social media, getting access to major news is very easy. There are sites and social media pages that are dedicated to exclusively live updates on forex trading.
In the UK, social media platforms Facebook and Twitter remain the top choices to stay tuned for live updates and discussions of events, while Instagram is pretty popular when it comes to connecting with expert influencers.
Increasing Traders Communication
On Facebook, there's a dedicated group for UK forex traders and it currently has over 25k participants. It serves as a discussion forum where traders in the UK can post and discuss anything related to forex trading starting from trading strategy, market trends, and even forex-related memes. Users can join the conversation right away by leaving comments and interacting with other traders.
Boosting Brokers' Exposure
Social media is also a great start to get to know various brokers. Many forex brokers have social media accounts these days to advertise their products as well as gain a wider audience. They can provide trading tips, trading signals, or educational content. While they build a certain image that will make them stand out in the public eye, traders get the opportunity to communicate directly with forex brokers and enhance their knowledge.
Some examples are Forex.com and FXCM on Twitter. These brokers have over 225k and 108k followers respectively. Aside from promoting their products, they also post market news and other useful information daily. The former even made several interactive polls so that traders could engage with their posts more. So even if you're not their client, you'd still find new insights from their page.
Moving Market Sentiment
Another thing about social media is that it can affect market sentiment - one of the biggest drivers of market movements. By looking at the current trends, hashtags, and general discussion related to specific currency pairs on social media, traders can get a sense of the market's mood. This information can then be used to support technical or fundamental analysis, creating a more comprehensive view of the market.
If the public sentiment is strong enough, the forex market can be impacted. The price of a certain currency might hit rock bottom if a significant number of forex traders decide to sell at the same moment. As a response, the rest of market participants will take action based on the current condition. This can be quite a big event in the forex market.
One of the most impactful events happened back in 2020 when a political correspondent tweeted that the probability of Brexit deal has shifted from 30% to 70%.
Almost 4 minutes before the tweet reached Revinitiv, GBP/USD surged from 1.2841 to 1.2871 before rising even higher to 1.2976 in 36 minutes following a confirmation tweet from Revinitiv.
This showed just how much social media can affect the public despite the news hasn't been published by any credible journalist.
The Role of Social Media Influencers in the UK
It is also worth mentioning that in the ever-evolving world of trading, the power of influencers on social media is over the roof nowadays. Social media influencers typically have huge followers and are able to influence how people think or feel. They don't just talk about beauty and lifestyle anymore, but also heavier topics like forex trading.
Social media influencers in the UK often share their experiences, opinions, and trading strategies. Additionally, they might also post trading analysis and offer advice for those who need help in making trading decisions. By doing these things, they can influence their followers to make certain moves based on their recommendations.
If the influence is strong enough, they might even set a new trend in trading behavior because the market reacts to the number of people buying and selling. For instance, a tweet from a renowned forex expert or analyst can sway traders' decisions, leading to a surge in GBP price.
Sometimes, influencers also collaborate with forex companies to promote their products, vouch for their reliability, and help them gain new customers. Such endorsement can put trust in the company they promote, helping it gain more awareness among online traders.
Here are some of the popular Instagram influencers and UK-based forex traders in 2024:
- Riz Iqbal with 122k followers: A successful UK trader and the founder of the Viper Group, which is one of the fastest growing UK trading communities. He is also a host in his own show "Wisdom with Riz", where he interviews top traders from many places about their trading strategies and experiences from trading for years.
- Steve Luke with 64.6k followers: A top trader with his own trading course to help traders make better decisions and aim for higher profits. Through his course, you'll get the chance to be taught directly by him and learn from his incredible trading analysis. His Instagram page is mostly filled with short chart analysis and words of wisdom dedicated to his followers.
- Albert Burgess with 28.7k followers: A former trading coach and now a UK-based hedge fund manager and YouTuber. His Instagram shows a glimpse of his life as a disciplined trader to offer valuable lessons and trading tips for traders of all levels.
Social Media Impact Also Has a Dark Side
While social media proves to provide an abundance of worthy information in real time, its reliability is far from guaranteed. Information overload can give you a headache, making it more difficult to filter out noise. It is important to only trust reliable sources and use critical thinking when it comes to taking advice or predictions obtained from social media.
Another potential risk concerning social media is herd behavior. Driven by impulsiveness and emotional trading, traders can easily change their strategies after looking at the current trends on the internet. Keep in mind that following a trend without a proper analysis is an easy ticket to losses and a bad practice of discipline.
Lastly, you should also be careful of forex scams on social media. While such cases are not new in forex trading, social media has made it even easier to perform than ever. A simple DM or WhatsApp message, for instance, can lead you to malicious sites made by hackers.
There have also several cases where Instagram influencers persuaded their followers into paying for scam practices or registering with illegal and unauthorized brokers. In other cases, they pretend to be an expert trader or clone a legitimate forex company.
One example is the story of a woman that goes by the name Sophia FX Trades. Her Instagram account has 17,000 followers and full of her photos in luxury outfits surrounded by wads of cash. She claims that her clients earn up to £2,000 a day after they invested in her free 30-day trial. Recently, the FCA put her on the warning list, stating that she is offering illegal services she's not permitted to charge money for.
Thomas Young from HackerNoon noted that In the United Kingdom, more than $32 million (£27 million) were lost in 2018-2019 due to forex-related trading scams. Suspiciously, more than 4 million Instagram accounts at the time were linked to the hashtag #forextrader.
What about Social Trading in the UK?
Social media has altered the way people communicate and gain insights on various topics. However, relying on social media interactions only is often not enough to make profits in volatile forex markets.
Because of this, many forex companies are launching social trading platforms to help traders copy each other's trades in addition to sharing their trading ideas. In other words, it's a new form of social media exclusively made for traders.
Some of the most popular social trading platforms in the UK are eToro and AvaSocial by AvaTrade.
Traders also seem to be highly enthusiastic about this system. In June 2023, eToro successfully reached 33 million clients worldwide with around 69% of them coming from Europe. With the rise of technology advancements and mobile apps, the number is expected to rise even higher in the future.
Final Thoughts
It is undeniable that social media has had a huge impact on forex trading in the UK. Platforms such as Facebook and Twitter have become go-to places for UK traders to look for the latest information and advice from other traders. Lately, Instagram has also been very popular, especially with the presence of influencers and successful traders on the platform.
In conclusion, social media has made the market more accessible and provided real-time access to market news, promoted forex trading companies, and influenced market sentiment. However, traders must approach social media with caution considering it also comes with many challenges. Social media must be treated as a complement to technical or fundamental analysis, rather than the main source of information. Additionally, UK traders need to be careful in addressing some so-called rich traders on Instagram to avoid scam traps.
5 Comments
Jan 27 2024
I can totally see the trend with Instagram influencers. I mean, any trader on the platform can definitely tell that there are LOADS of young people out there claiming to be an expert trader these days. Most of them only use their accounts to show their success in maintaining a luxurious lifestyle from trading, but not really showing how they won the trade. This got me thinking like, should I trust these people?
In fact, I've actually been invited to some of their programs and I was planning to sign up, just to see what they offer. Is this a good idea? Do you have tips on how to identify a forex scam on social media quickly and effectively? What are the red flags that I should avoid? Thanks in advance
Jan 28 2024
I think it's good that you're aware of the possibility of forex scams and that you're being careful in trusting influencers on social media. It's true that these days, scammers can pose as professional traders, mentors, influencers, or expert analysts. They may claim that they're the best at their field and perhaps even post false certificates or analytics to gain traders' trust.
We've seen similar cases where the scammer offered fake investment packages, which then caused traders to lose a fortune. Scammers may contact their potential victims via WhatsApp or Instagram, claiming that they're affiliated with top brokers. They promise fantastically high returns at low cost.
A common tactic used is to demand traders to pay a certain fee or deposit before granting the high returns. They may emphasize that the opportunity is short-lived, urging you to make the decision quickly. This is one of the things that you should avoid. If they ask for money upfront, better say no and move on.
Jan 30 2024
The first step for me is to do a thorough research of the company or influencer. Check their website, their programs, and don't forget to read the user reviews. Alternatively, you can also discuss the matter in forex online discussion forums with other traders and see whether the person/company is trustworthy.
Second, don't believe in everything they say. Most scammers would offer you unrealistic returns with extremely low cost. The best way to identify such scams is to learn the basics of trading yourself. If you understand how it works, it will become easier to notice offers that are "too good to be true".
Lastly, be cautious of unverified numbers and unknown contacts. Make sure to verify the authentication of the information before communicating with them. Do not give away your personal information to anyone no matter the circumstances.
Jan 29 2024
The concept of social trading is very interesting to me. Instead of only copying other traders, you can ask around and gain new insights from expert traders on the platform. It can be an excellent way to learn as well as to judge whether the signal provider is reliable or not. However, I'm still new in this field, so I'm not sure how to approach other traders and interact with them. Most of the time I'm not sure what exactly am I looking for. Any tips on how to maximize the use of social trading platforms?
Jan 30 2024
Hey there! Here are some common strategies in social trading:
I personally like to use social trading platforms to keep up with the latest trends and interact with other fellow traders. If you don't know what to ask, you can just enter a discussion forum and join the discussion. You may gain valuable lessons from there.