What is social trading?
Social trading refers to the process used by online investors to access financial information. The generation of content takes place on various web applications. They are a significant source of information that is used to make online investment decisions.
The fundamental aspect that makes social trading a treasure in the current financial market is the fact that it brings together knowledge and skills of experienced traders. Traders from all over the world connect on various social trading networks. It provides a framework and a platform for analyzing the financial markets alongside the respective trades concurrently.
In the recent past, social trading networks were used as platforms to pass ideas among traders. However, these networks have transformed to feature a lot more than that. For instance, most of the sites now provide automated trading. Besides, traders have the opportunity to view, analyze and track the activity, and performance of experienced traders.
In addition to that, the platforms have integrated the feature to allow copying of trades done by expert traders. The social trading networks are an easy way to learn how to trade with minimal loss in capital. On the other hand, experienced traders making an income from trading can earn more by sharing trades on the networks.
How does social trading work?
Social trading cannot be discussed without social networks coming up. Is there a difference between the two? There is indeed a slight difference between social trading and social networks. Social trading focuses mainly on trading as opposed to the social aspect of it. It details the profiles of the traders according to what they do, the experience they have and how much they have achieved in the past.
This is contrary to social networks which provide general information about people. Social trading networks give relevant information to trading only. Similarly, it is advisable to be careful whose advice you take into consideration. Just like social networks, traders might provide information that is untrue as well.
Watch and learn
Starting as a trader on social trading networks requires you to be able to watch and observe the trades placed by expert traders. These traders are obliged to reveal all the information concerning their trades. Therefore, to a beginner on such platforms, information and ideas are readily available.
Developing a strategy by comparing trades performed by various traders is the best way to gain more traction doing social trading. In addition to that, this content is available at every given moment. Strive to grasp as much as possible from information provided by the networks before placing making any decision towards investing.
Follow certain traders
It is evident that there will be a trader on the platform who has a trading activity that more interesting in comparison to the rest. It could be due to the niche markets they trade in or the way they place their trades, or, it could be how much profit they have made trading. Social trading has a feature where traders can be “followed.” Following particular traders ensures that you get a notification when that trader takes action. Moreover, messaging the traders for specific queries is easier.
Copy trades
The hardest part in social trading is identifying the right traders to copy. However, if the traders are identified, the trades they place can be replicated. However, trades to copy should be those from traders who are extremely good at what they do. The number of profitable trades can allow you to filter high-calibre traders.
Likewise, statics of the trades are provided on the platforms. For example, the number of open trades, their expected profits, and additional details will be availed. These details are a great way to start learning how to trade like an expert if you are a beginner.
How to start social trading
Before you start social trading, it is crucial to consider some specific factors. For instance, it is necessary to review various social trading platforms before making your selection. As technology changes, the number of the trading platforms available also increases.
Choosing the right social platform will prevent frustrations in future. These trading platforms are quite similar. However, they differ regarding how they calculate fees and the minimum deposit you need to make before you begin trading on the site.
Furthermore, deciding on the best FX broker is beneficial to social trading. Make sure that the social trading platform supports the chosen broker. The social trading networks provide a list of brokers affiliated to the platforms. If you are new to trading, this list can come in handy. Look at the reputation and reviews of the broker before making a selection.
Setting a trading strategy on how to allocate the trading fund is necessary. Followed by opening an account on one or more of the social trading platforms online. Opening an account does not require any monetary deposit. Consequently, it is vital to get started with a demo account. Learn how to trade without the risk of losing money. Finally, research and identify the best traders to copy.
Social trading platforms
Social trading platforms are available in abundance on the internet. Researching the major platforms is significant. Some of these platforms include:
- Zulu Trade
- Fx Pro Super Trader
- eToro
- TradeCrowd
- Signal Trader
- Currensee
- Meta Trader
- Gallant Trader Copier
- Zip signals
- MyDigTrade
- FxStart
All of these platforms provide the same service under different terms. They are different from each other on how they calculate their fees and the minimums.