The social trading platform Collective2 has recently announced it is seeking to raise $5 million capital from accredited investors through a private placement.
The move is under the provisions of Jumpstart our Business Startups Act ( “JOBS Act”) Rule 506(c) exemption to Regulation D, which allows general solicitation of a private placement.
Collective2 was established in 2001 in the US and is one of the older social trading platforms. It offers 58 000 trading strategies on stocks, options, futures and forex, ranked and rated from which users can choose, set their trade size and turn on the automatic trading option of their account. Users can monitor their results and share them within the platform. Collective2 offers a $100 000 simulated trading account for users to trial before connecting their live brokerage accounts.
The “trade leaders” can earn by selling their trading signals and offer automatic trading to their clients.
Collective2 has more than 95 000 registered users and boasts +290% increase in monthly user sign-ups in the past year. According to the company estimates, there are over $50 million in connected brokerage accounts and more than $175 million traded daily in the period September 13-20, 2016.
Among the large brokers supported by Collective2’s platform are Interactive Brokers, Gain Capital, Options House, TradeKing and NinjaTrader.
The platform earns its revenue by charging subscription and other fees. The trade leaders must pay a 6-month listing fee to maintain their strategy on Collective2 and an auotrade fee if they want to turn on the option. Investors must pay a monthly fee to the platform. Additionally they must also pay the trade leaders a monthly fee for following their strategies.
Social trading is an easy solution for those who do not have enough time or expertise to create their own strategies, but want to try their hands at trading. Among the most popular social trading platforms are eToro, Ayondo, TradingView, Darwinex, Zulu Trade and Tradency. Some of the major forex brokers, such as FXCM and FxPro, also offer social trading or variations of it.