What is social trading? Can everyone use it? This type of trading is open to all traders and everyone can benefit from it. If there are traders who are reliant on technical and fundamental analysis, there are also traders who are interested in observing and replicating the analysis of other successful traders.
Oftentimes, it is regarded as a type of social network because of its function of interacting against other trades, checking their trades, and learning strategies as well as the decision-making throughout the process.
How Social Trading Works
This type of trading provides fast access to the financial market which enables experienced and newbie traders to share their strategies and even copy their trading styles. And because the industry has accepted it wholeheartedly, there are more advanced platforms introduced to the public to make it a lot easier to be a social trader. Either you can use a social trading platform or utilize elements that complement the practice.
Most traders will want to utilize an integrated social trading platform that facilitates comprehensive sharing of ideas either through the use of features like mirror trading and copy trading. But with a social networking platform, you will only have to choose a trader that you think is capable and highly credible. Then, you subscribe to the trader’s channel where he shows live feed, allowing the subscribers to copy their individual deals. Trader A executes a certain trade and then Trader B also executes a similar trade.
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What experienced traders will get for sharing their strategies are money and status. Most social trading platforms have a specific leader board that is based on the success rate of the trader and his popularity. Moreover, this strategy doesn’t mean that you can’t get a hold of your trades because you can still use a range of indicators and signals to maintain access to your trades. This trading strategy acts as confirmation as to a particular analysis held in the market.
What Markets Can You Trade in Social Trading?
In early 2000, this was used to copy the trades of successful traders, their strategies, and movement in the market. But it has since become open to retail traders for a range of trades across different markets. More importantly, anyone can join, whether you have experience in trading or you don’t. It is also popular in commodities, shares, and indices aside from foreign exchange trading.
Things You Need To Know Before Starting with Social Trading
Although social trading has been praised for all its benefits and advantages towards traders, it is also criticized for a couple of its drawbacks particularly for its downplaying of knowledge that one needs to be able to properly function in the financial market.
One of the misconceptions that traders tend to get is that social trading eliminates the risks of trading. Unfortunately, all forms of trading involve risks and traders will have to accept them and deal with them before losses overpower the gains. This is seen as the largest drawback of this trading concept.
