In the contemporary trading space, the novel buzzword is ‘’Social trading’. And it is rightfully so, as many top analysts within the industry have suggested. The next phase in the evolution of social media is social trading. It’s a relatively new style of trading that uses the Internet’s capability to provide users with quick and continuous access to market information.
Unlike technical and fundamental analysis, information is generated by other users in social trading, allowing beginners to execute trades without having to undertake their own assessments.
In other words, you make financial decisions based on the data and assessments of others. The system allows you to seek or provide assistance to others in your trading space. Providing a never-before-seen social element to trade. It is a democratization of asset management that increases access and lowers costs.
Not only is social trading useful to both new and seasoned traders, but it also helps beginners learn faster.
Related: The Complete Social Trading Guide
Fundamentals of Social Trading
Users can share information with other members of their community in real-time. As one of the method’s fundamental benefits. It allows rookie investors to monitor and then imitate the trades made by professionals.
This allows rookie traders to see how experienced traders conduct business. The rationale behind their trading decisions, and the trends they watch for.
As a result, social trading enables newbies to learn quickly through a live setting. Not only that, but it may also allow them to trade with less risk.
It wasn’t uncommon in the past for new traders to lose some money as they were learning how to trade. While many saw these initial losses as the cost of their trading education. Social trading helps to potentially reduce such losses and accelerate one’s trading education.
A Good Example: The Best Teacher
To better comprehend what social trading is all about, imagine receiving relevant information on your investments on your Twitter or Facebook page.
Let us take a look at a more detailed example:
A colleague of yours did research on a new product that a well-known pharmaceutical company is preparing to introduce. This will almost certainly cause their stock to increase in value. Indicating that the best moment to buy is most likely now.
Another of your colleagues notifies you that one of their stocks is projected to decline in value. Owing to a political controversy involving another company.
Because you hold the same stock, this might be a good moment to sell.
The concept of social trading is based on a few basic tenets:
– Everyone should be able to invest in the stock market without having to pay high brokerage fees.
– Not everyone has the time to keep track of market movements in real-time.
– People should be able to choose what they put their money towards.
– Trading may be democratized, and knowledge may be easily shared globally, thanks to advanced social technology.
Based on these concepts, a few online services are allowing the general public to move beyond stock tips and instead profit from the success of some of the world’s most successful traders.
Imitation is often the sincerest form of flattery in finance, as it is in life. Investors may now share – and imitate – trading ideas easier than ever before.
Thanks to new technology and developments in social trading platforms and the Internet.
Traders who allow others to imitate their strategies frequently may be compensated. With a small commission, each time copies them, the expert earns more. This is usually built into the technology of the social trading platform.
This payment isn’t much in and of itself, but when a top trader has thousands of followers, it may add up to a nice monthly bonus. If they can persuade enough individuals to follow their trades. For example, traders may become a signal provider on Tradeview Forex using our Communi-Trader software
Each trade performed by a live follower account earns signal providers a commission, while Tradeview Markets compensates signal providers based on the number of followers they accumulate.
Types of Social Traders
STP traders can be split into two categories:
Experienced: (also known as trade leaders or signal providers) are seasoned traders who have a track record that can be shown on their profile page.
These traders perform their own financial analysis, which may be based on technical, and or fundamental analysis of various indicators and data.
They create and test a trading strategy based on their analysis in order to determine its profitability, and after they identify the best approach, they execute it with their own money.
Investors (also known as trade followers or signal followers) are usually new traders or investors who don’t have enough time to complete their own research and analysis but want to invest their money and acquire exposure to a specific trading strategy or asset class.
To do so, individuals can use a function called mirror trading to set up their account to automatically duplicate the trading action of Professional traders.
Furthermore, they have the option of imitating only individual trades rather than the Expert’s whole portfolio. While investors may not have the time or technical skills to develop lucrative trading strategies, they should do their homework on the person they want to emulate.
When investors entrust experienced traders with managing their funds. They should ensure that she/he has the ability to handle their funds according to their specific investment preferences. It is vital to remember that investors can still use a portion of their funds to perform their own research and trades.
In social trading, sharing information and learning from the best is only the first step. You can eventually imitate and collaborate with other like-minded people in a group for mutual profit.
You will gain knowledge, trade, meet new friends, and earn money. The possibilities are unlimited when it comes to social trading. It may also considerably reduce the time it takes to progress from being a novice to an advanced trader.
You’ll be able to make your own trades and even assist newcomers on their way to becoming seasoned traders before you realize it. You’ll learn how to interpret charts, make accurate predictions, and profit from the financial markets.
However, you must never forget that there are risks. Losses are a part of the process, and if you aren’t watchful, they will infiltrate your everyday routine in a dreadful way.
Nothing destroys a day like losing enough money to entirely wipe out the previous day’s gains. To ensure that this does not happen, you will need to learn a number of skills to improve your asset management. Fortunately for you, there is an entire community on TradeGATEHub you can learn from and rely on for information and ideas.