From Copy to Practice: Follower’s Learning Behavior in Forex Social Trading

Mengli Yu, Yijing Li, Zhao Cai, Fei Liu, Chee-Wee Tan

Research output: Chapter in Book/Report/Conference proceedingArticle in proceedingsResearchpeer-review

Abstract

Forex social trading platforms endows novice investors with opportunities to trade on foreign exchange markets by mimicking the investment strategies of sophisticated traders. But concurrently, the copy-trading mechanism underlying these platforms foster a conducive learning environment whereby inexperience followers could evolve into independent traders by observing and learning from the trading behaviors of prominent traders. Drawing on observational learning theory, we advance learning efficiency and effectiveness as focal yardsticks to encapsulate followers’ learning performance and explore their effects on the profitability of followers’ first independent trades. Preliminary analysis conducted on a leading forex social trading platform reveals that traders’ trading consistency amplifies followers’ learning efficiency whereas traders’ profitability bolsters followers’ learning effectiveness. Furthermore, while our empirical findings attest to the criticality of learning effectiveness on followers’ ability to profit from their initial independent trades, speeding up the learning process may not guarantee better performance.
Original languageEnglish
Title of host publicationProceedings of the 40th International Conference on Information Systems (ICIS)
EditorsHelmut Krcmar, Jane Fedorowicz, Wai Fong Boh, Jan Marco Leimeister, Sunil Wattal
Number of pages9
Place of PublicationAtlanta, GA
PublisherAIS Electronic Library (AISeL)
Publication date2019
Article number2824
ISBN (Electronic)9780996683197
Publication statusPublished - 2019
EventThe 40th International Conference on Information Systems. ICIS 2019: Information Systems - The Heart of Innovation Ecosystems - International Congress Center Munich (ICM), Munich, Germany
Duration: 15 Dec 201918 Dec 2019
Conference number: 40
https://icis2019.aisconferences.org/

Conference

ConferenceThe 40th International Conference on Information Systems. ICIS 2019
Number40
LocationInternational Congress Center Munich (ICM)
CountryGermany
CityMunich
Period15/12/201918/12/2019
Internet address
SeriesProceedings of the International Conference on Information Systems
ISSN0000-0033

Keywords

  • Forex social trading
  • Observational learning
  • Copy trading
  • Manual trading

Cite this

Yu, M., Li, Y., Cai, Z., Liu, F., & Tan, C-W. (2019). From Copy to Practice: Follower’s Learning Behavior in Forex Social Trading. In H. Krcmar, J. Fedorowicz, W. F. Boh, J. M. Leimeister, & S. Wattal (Eds.), Proceedings of the 40th International Conference on Information Systems (ICIS) [2824] Atlanta, GA: AIS Electronic Library (AISeL). Proceedings of the International Conference on Information Systems
Yu, Mengli ; Li, Yijing ; Cai, Zhao ; Liu, Fei ; Tan, Chee-Wee. / From Copy to Practice : Follower’s Learning Behavior in Forex Social Trading. Proceedings of the 40th International Conference on Information Systems (ICIS). editor / Helmut Krcmar ; Jane Fedorowicz ; Wai Fong Boh ; Jan Marco Leimeister ; Sunil Wattal. Atlanta, GA : AIS Electronic Library (AISeL), 2019. (Proceedings of the International Conference on Information Systems).
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title = "From Copy to Practice: Follower’s Learning Behavior in Forex Social Trading",
abstract = "Forex social trading platforms endows novice investors with opportunities to trade on foreign exchange markets by mimicking the investment strategies of sophisticated traders. But concurrently, the copy-trading mechanism underlying these platforms foster a conducive learning environment whereby inexperience followers could evolve into independent traders by observing and learning from the trading behaviors of prominent traders. Drawing on observational learning theory, we advance learning efficiency and effectiveness as focal yardsticks to encapsulate followers’ learning performance and explore their effects on the profitability of followers’ first independent trades. Preliminary analysis conducted on a leading forex social trading platform reveals that traders’ trading consistency amplifies followers’ learning efficiency whereas traders’ profitability bolsters followers’ learning effectiveness. Furthermore, while our empirical findings attest to the criticality of learning effectiveness on followers’ ability to profit from their initial independent trades, speeding up the learning process may not guarantee better performance.",
keywords = "Forex social trading, Observational learning, Copy trading, Manual trading, Forex social trading, Observational learning, Copy trading, Manual trading",
author = "Mengli Yu and Yijing Li and Zhao Cai and Fei Liu and Chee-Wee Tan",
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series = "Proceedings of the International Conference on Information Systems",
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Yu, M, Li, Y, Cai, Z, Liu, F & Tan, C-W 2019, From Copy to Practice: Follower’s Learning Behavior in Forex Social Trading. in H Krcmar, J Fedorowicz, WF Boh, JM Leimeister & S Wattal (eds), Proceedings of the 40th International Conference on Information Systems (ICIS)., 2824, AIS Electronic Library (AISeL), Atlanta, GA, Proceedings of the International Conference on Information Systems, Munich, Germany, 15/12/2019.

From Copy to Practice : Follower’s Learning Behavior in Forex Social Trading. / Yu, Mengli; Li, Yijing; Cai, Zhao; Liu, Fei; Tan, Chee-Wee.

Proceedings of the 40th International Conference on Information Systems (ICIS). ed. / Helmut Krcmar; Jane Fedorowicz; Wai Fong Boh; Jan Marco Leimeister; Sunil Wattal. Atlanta, GA : AIS Electronic Library (AISeL), 2019. 2824 (Proceedings of the International Conference on Information Systems).

Research output: Chapter in Book/Report/Conference proceedingArticle in proceedingsResearchpeer-review

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N2 - Forex social trading platforms endows novice investors with opportunities to trade on foreign exchange markets by mimicking the investment strategies of sophisticated traders. But concurrently, the copy-trading mechanism underlying these platforms foster a conducive learning environment whereby inexperience followers could evolve into independent traders by observing and learning from the trading behaviors of prominent traders. Drawing on observational learning theory, we advance learning efficiency and effectiveness as focal yardsticks to encapsulate followers’ learning performance and explore their effects on the profitability of followers’ first independent trades. Preliminary analysis conducted on a leading forex social trading platform reveals that traders’ trading consistency amplifies followers’ learning efficiency whereas traders’ profitability bolsters followers’ learning effectiveness. Furthermore, while our empirical findings attest to the criticality of learning effectiveness on followers’ ability to profit from their initial independent trades, speeding up the learning process may not guarantee better performance.

AB - Forex social trading platforms endows novice investors with opportunities to trade on foreign exchange markets by mimicking the investment strategies of sophisticated traders. But concurrently, the copy-trading mechanism underlying these platforms foster a conducive learning environment whereby inexperience followers could evolve into independent traders by observing and learning from the trading behaviors of prominent traders. Drawing on observational learning theory, we advance learning efficiency and effectiveness as focal yardsticks to encapsulate followers’ learning performance and explore their effects on the profitability of followers’ first independent trades. Preliminary analysis conducted on a leading forex social trading platform reveals that traders’ trading consistency amplifies followers’ learning efficiency whereas traders’ profitability bolsters followers’ learning effectiveness. Furthermore, while our empirical findings attest to the criticality of learning effectiveness on followers’ ability to profit from their initial independent trades, speeding up the learning process may not guarantee better performance.

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KW - Manual trading

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BT - Proceedings of the 40th International Conference on Information Systems (ICIS)

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Yu M, Li Y, Cai Z, Liu F, Tan C-W. From Copy to Practice: Follower’s Learning Behavior in Forex Social Trading. In Krcmar H, Fedorowicz J, Boh WF, Leimeister JM, Wattal S, editors, Proceedings of the 40th International Conference on Information Systems (ICIS). Atlanta, GA: AIS Electronic Library (AISeL). 2019. 2824. (Proceedings of the International Conference on Information Systems).