The idea of copy trading is simple: use technology to copy the real-time forex trades (forex signals) of other live investors (forex trading system providers) you want to follow. This way, every time they trade, you can automatically replicate (copy) their trades in your brokerage account.
Truth is…Trading is not easy
Studying the market takes time. Building and maintaining a trading strategy is hard. That’s why only 11-26% of manual investors end up winning.
Notably, while social trading is not a new concept as it was used by many traders for several decades – it has emerged as a vital tool to investors when the internet became accessible. eToro was one of the first social trading platforms in the market that started operating around 2006. Other famous social trading platforms that have emerged since then include NAGA, ZuluTrade, and Duplicate.
Benefits of Social Trading
Trading on a social trading platform is a fascinating way to approach the markets. Below, we’ll give you the top reasons why social trading can be beneficial on your journey to create a profitable portfolio.
- Unlike traditional trading platform, social trading networks are much more fun to use
- Free flow of information from other users
- It is extremely easy to use
- Copy Trading – Social copy trading enables you to trade the markets without having to spend time on research and trading in front of the computer
- You get to interact with other members of the network and share trading ideas
- Removes the tension and stress of self-trading
- Risk management tools – In some of the social trading platforms available in the market, you can choose the risk you’re comfortable with.
Copy trading is the act of copying trades of other traders. Some copy trading platforms enable traders to copy another trader and echo success.
They pick a trader from the leader board where every trade the person makes goes into the traders’ account.
Restrictive controls monitor the accounts, so they don’t follow someone blindly. But still, the overall responsibility is in the trader.
Copying is a quicker way to trade without the concern of making choices as they all need to do is choose the trader that seems to be the best and copy it.
Sharing information and learning from the best is just the first step in social trading. In time, you can copy traders (a process called copy trading, which we will explain in the next section), as well as work with other like-minded in a group for a mutual benefit. You will learn, trade, create new friendships and make money. Social trading opens the door to endless possibilities. It significantly shortens the learning curve from a beginner to intermediate level trader. Before you know it, you will be able to make your own trades and even help newbies on their journey to becoming traders.
So, in simple words, Social Trading is the activity to learn which strategies work, which are not, with an opportunity to duplicate or become an expert while all brought by a very attractive cost, with the only payment a small markup on the successful trades.