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Created on 07.08.2019

Social trading: how to invest in wikifolio certificates

wikifolio is an exciting opportunity for investors to benefit from the knowledge of private and professional investors alike, and to invest in their trading ideas by means of social trading. This is made possible thanks to “wikifolio certificates”. Find out everything you need to know here.

Social trading platforms combine stock exchange trading with the benefits of social media. Just like other platforms such as Twitter or Facebook, the subscribers post their personal views and opinions on all sorts of topics. On a community platform like wikifolio, wikifolio traders can share information about developments on financial markets around the world, and follow the trading ideas and strategies of other wikifolio users. Find out just how social trading works in the article “Social trading”.

Follow the trading ideas of investment pros

Private and professional investors alike have the opportunity to test their trading ideas with practice custody accounts and to share them openly with other users. In a wikifolio context, this is known as a trading idea. Some users, for instance, will create a practice custody account based on a current megatrend (e.g. Internet of things or Industry 4.0). Others may invest in individual industries or specific raw materials such as coffee, consumer goods and Esports, or adopt a regional focus for their practice custody account and trading ideas. Depending on their strategy, they will either invest on a long-term or short-term basis, use shares from the investment universe or combine their practice custody account with ETFs, funds, investment certificates or leverage products. The possibilities are almost endless – any trading idea can be put into practice, and any risk profile can be reflected. This is therefore an interesting opportunity for investors who want to focus on a specific area without having to take full control of selecting the shares. Of course, the opposite is also true: social trading platforms like wikifolio also give investors with a high level of expertise or professional traders the opportunity to share their trading ideas with other users and to discuss them. As soon as your own wikifolio certificate has reached “investable” status, you have made it past the first hurdle to earning money with wikifolio.

How wikifolio certificates are created

Anyone with their own practice custody account (i.e. a wikifolio) will be able to trade 100% openly with it on the platform. The community can at any time view decisions made on transactions (buying/selling) and all fees, comment on them and bookmark them for trading. If a portfolio proves successful, it will be used as the basis for launching a financial product that will be listed and traded in euros on Börse Stuttgart (Euwax) and in Swiss francs on BX Swiss (BX): wikifolio certificates have their own ISIN number. To list a wikifolio and make it investable, there are certain criteria that have to be met: the practice custody account must have a minimum term of 21 days, it must have been bookmarked ten times by other users and have reserved capital that totals at least CHF 2,500. The user behind the trading idea, and therefore behind the wikifolio certificate, is also checked. An expert from the company Lang & Schwarz will check the user’s personal details and the description of their trading idea. If all the criteria are indeed met, the user can apply online to have the wikifolio certificate issued definitively. Once this has happened, the edit mode in wikifolio is disabled, meaning neither the investment universe nor the master data can be edited again. Unlike copy trading, which is also becoming more and more widespread, social trading investors have the option of buying or selling a wikifolio certificate via their own custody account. wikifolio certificates are traded in Swiss francs on the Berne stock exchange BX Swiss, in euros on Börse Stuttgart (Euwax) or over the counter through Lang & Schwarz. Anyone who owns a wikifolio certificate can resell it with ease at any time through their own bank. 

Varied, diversified, transparent and dynamic

The fact that so many investors are now publishing their trading ideas and trades on wikifolio means you can invest in a huge variety of wikifolio certificates. Any risk profile, focus and investment category can be reflected and traded. Investors should consider which wikifolio certificates would fit into their current investment mix and diversify their financial investments accordingly. However: as users can always see the ranking of the best wikifolios, it is very tempting to sell certificates more often and invest in top performers. It is important for every investor to keep sight of their own strategy and to try and resist the temptation to chase profit when it comes to a long-term strategy – just as with other investments.   

Open to all investors

Essentially, anyone can create their own wikifolio – though it does tend to be advanced, professional traders who publish their practice custody accounts and trading ideas and manage these so successfully that they create a certificate. Any investor can view and comment on custody accounts or invest in certificates, no matter their level of experience or expertise. What’s more, wikifolio is free for investors and traders to use. Fees are payable only once an investor decides to invest in a wikifolio certificate. Exchange rate information at wikifolio (minus certificate and performance fees) is taken into account up to the previous day. In addition to these fees, which are already factored in, the only other charges a customer will pay are the usual transaction fees via the custodian bank for buying/selling wikifolio certificates.

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