Social Trading And Copy Trading: Is Social Trading Profitable?
Social trading and copy trading are the almost similar trading method that traders choose to follow other professionals. It provides beginners and inexperienced traders an opportunity to invest in trading.
Binary options traders can also enjoy this trading facility by using selective trading platforms.
These two are independent forms of trading that mostly help traders to collect trading knowledge from skilled traders, or you can say, professionals. Moreover, you can also copy the winning strategies of professional traders.
In this article, we will give you an introduction to both social and copy trading. Moreover, we will also present you our justification on whether social trading is profitable or not.
What Is Social Trading:
Social Trading is a trading process or method that allows traders to monitor and follow other traders through a platform. In general, via a platform, traders create a group like informal social media where they share all financial idea, news, strategies etc.
Moreover, the idea is somewhat similar to the social platform that enables users to share their views and opinions.
Before the invention of social trading, people used to communicate with each other through e-mail. After entering the social trading idea on trader’s mind, they consider it as an exclusive source of passive income.
A person can easily make an investment decision by following the major group or an individual expert person, who is continuously at the winning position.
What Is Copy Trading:
Copy trading is part of social trading. It is a method that comes before social trading. This trading method is also known as mirror trading. In this method, expert traders connect their account with other traders so that inexperienced traders can copy trades from them.
After finding a reliable copy trading platform, you have to select one or more professional traders. No prior trading experience is needed to copy a trader.
Moreover, you don’t need to analyze the market before copying anyone.
How Social And Copy Trading Works
Both copy and social trading work almost in the same way. In copy trading, you have to select a platform and a trader that you want to copy. Clarify your queries with one to one conversation.
After confirming the trader’s trading history and performance, link your trading account with that selected trader.
Similarly, in social trading, traders open an account in a platform with all valid information. A trading chat room appears where you will find many traders from less experienced to experts.
Through the chatroom, traders will able to communicate with each other via comments.
Reputable Service Provider (Best Platform For Social & Copy Trading)
Though a lot of platforms offer copy trading or social trading service, there are two reputable services available accepted by a wide range of traders. eToro and ZuluTrade are one of the best platforms so far for social trading.
These are legitimate and functional social trading platforms. For your better understanding, we will point our some common features here:
Mobile Trading: Yes
Mobile Trading: Yes
Is Social Trading Profitable?
Yes, social trading is a profitable process for both less skilled and skilled traders. Both types of traders can increase earn money by adopting this trading form.
However, it is not profitable for everyone. It can be unsafe for a few traders if they pull any risky trading strategies or signals. Even more, most of the time, traders ended up by blowing their account.
If you can maintain a pro chain of rules, then social trading will bring profits. In reality, it will depend on your trading style and how quickly you learn the process of this trading form.
Moreover, social trading also polishes your communication skills with investors. As there will a community, so you can interact with other investors by sharing information and knowledge.
Benefits Of Social Trading And Copy Trading
The major aim of this method is to make a community of investors who assume the risk and share strategy of profitable returns. This types of trading systems work as learning tools to new investors. Moreover, an expert trader’s skill and knowledge are distributed among the users in the same platform.
A trader can flood with many possible benefits that we will mention below:
- You can rise your trading level
- Both social and copy trading platform is a good source of learning
- Passive income source for top traders
- Real-time trading opportunity
- Access to an international financial market
- Improve your trading strategies
Why People Lose Money?
Apart from these mentioned advantages, there are also some disadvantages. Most investors don’t study well before making a trading decision.
They only rely on ranking based success while choosing any skilled investors. But they are unable to measure success and failure ratio of that investor they are following, as the platform does not provide any information about the trading volume of the successful investor.
Furthermore, according to our research, more than 70% of traders agreed that they lose money with social or copy trading for their greed and lack of management.
We will specify some points here that one trader needs to avoid.
- Poor risk management
- Lack of diversity
- Don’t know who to follow
- Lack of trading efforts
- Unrealistic expectation
- No patience
In conclusion, both trading forms allow investors to make investment easily rather than using own judgment. The success of these types of investment solely depends on choosing the right group of investors to follow.
We aimed to guide you on the right path so that you can choose the best option for a future goal. Trading is not an easy peak for traders without having appropriate guidelines. So, trade hard and improve skills.