Aleksey Shevchenko
27 December, 2019

Era of social trading

Trading signals have become so widespread that they have grown into a kind of trading. For this purpose, a new infrastructure is being created in the financial markets.

The relatively new understanding of “social trading” in the crypto-market is just picking up steam. Basically, social trading is a subtype of trading on financial markets, but the main idea is centered around the copying of trades of successful traders. One might say that this type of trading has its origins in trading signals.

Trading Signals

There are literally thousands of signal suppliers throughout the world. They might be authoritative companies or brokers, and most of these companies work on the Forex market. But they are turning up more and more on the cryptocurrency market.Trading signals are just notifications that a trader gets on their computer or smartphone that say which asset to buy or sell at a given moment. This service is quite popular among beginning traders or people who do not have enough time to actively trade, and, probably, perhaps in the worst case, a novice. These notifications do not say how to properly manage your capital, nor do they describe risks. Most importantly, signals cannot be the only tool used for profit. It must be used as an auxiliary element in a trading strategy. Most novices blindly rely on trade signals and 99% of the time lose money.

Copy Trading

Auto-copying trades suits beginning traders quite well. For one thing, the majority of people trading on the financial markets don’t completely understand the vast amount of information they are supposed to absorb and how much energy they would have to spend on it in order to achieve success. In the end, most eventually quit trading without a positive result.

An enormous plus of copy trading is that novices can actually do the trades themselves, while at the same time following how professional traders (who they trust) are doing. While imitating the success of professionals and analyzing trade statistics, with time you can understand the markets and begin to trade independently. Copy trading is a fantastic alternative education. You can save a whole lot of time while increasing your capital. 

If studying financial markets is not really your thing, this is a great way to get started with investing. You need to choose a few traders with different trader strategies in order to hedge your money and delegate capital to them for management. This can be done by sending capital into someone else’s hands, that is, subscribing to copying their trades. For this type of activity, it is better to use independent platforms for social trading where there is an active community of trading professionals.

Social trading

Since copy trading has become such a popular type of trading, platforms have begun to spring up as one would expect with the evolution of interaction between new and experienced market participants. Basically, it is a social network for traders. However, instead of sharing photos and videos, traders and investors share their trade ideas and the trades they have executed. Thanks to platforms like this, private investors and trades can interact effectively, gaining practical and theoretical experience.

With the help of social trading you can earn a lot of money, but you must very carefully approach the choice of trader and trading algorithm. Good trade statistics should be examined from a distance. You must also understand that one single trader cannot trade 100% successfully and even the best traders can experience a period of losses which you could even suffer from. When linking up with a trader, you must observe the risks, and it is best to begin to trade with a small percent of your capital and built it up your portfolio little by little.