MIT’s $1mm Test of Social Media Investing

MIT will run an experiment to see if social media investing improves performance.  It’s doing so by giving $100 each to 10,000 Asians to trade forex on eToro by following high-performing traders and copying their trades.

Previous research has shown negative results for social investing, so it will be interesting to see if this test is successful.  A new wave of social trading platforms are emerging to capitalize on the idea that sharing information improves financial decisions (please see The Algorithmic Trading and Autotrading Universe for lists of such sites), so we can be sure that a positive outcome will take the spotlight in articles and press releases.  Time will tell.

Read it all. (via Abnormal Returns)

Leave a Reply