What is Social Trading?

What is Social Trading? What is Social Trading - Stock Market Tips Forex Trading Signals Free Forex charts.250.001

Over the over 30 years, stock and Forex markets have seen huge changes. From the crowded, bustling trading floors of the early 20th-century to the modern computerised, algorithmic high-frequency trader of the 21st century. Social trading is one of newest twists on the established financial industry.

The principle of social trading is simple, build online communities of traders interested in similar securities, then allow their users to share ideas / trade on those ideas. In laymen’s terms, it’s like a “Facebook community” which offers access to the worlds multi-trillion dollar securities markets.

Whether you’re wanting to learn to trade Forex, stocks, indices, commodities or ETFs, most social trading platforms facilitate community-wide conversation and analysis of a securities market.

Several social trading platforms offer features like “Copy Traders“, allowing potential investors access to the verified historical portfolio financial records of other profitable active users on their systems. Using “Copy Trader” features allows potential investors to access the world’s financial markets without spending countless hours studying technical aspects of trading and then ongoing research of potential opportunities.

Please don’t forget, with any investment comes risk. To help guide users, most social trading platforms with a “Copy” feature typically assign a “Risk” value to traders available for copying. This helps offer new investors a simple method of understanding the potential risk factors associated with any “copy trader“.

One principle idea of investing in “spreading the risk”. Whether individual stocks, currencies or copied traders, sharing your investment “pot” into several smaller investments is a safer method than placing the whole fund into one “boom-or-bust” portfolio.

Companies like eToro offer their users a unique and novel “Copy Funds” feature where a investment fund is automatically allocated to a group of historically profitable “low-risk” traders.

For new / novice traders, personally I think social trading platforms are a great place to start. Being able to copy and talk through ideas with “more experienced” traders is a great tool. There are fantastic and experienced individuals on these platforms who are willing to share / discuss their potential ideas. It’s like having access to hundreds (if not thousands) of daily recommended stock market tips and Forex signals.

Experienced or high volume traders typically might find the market spreads offered on social trading platforms substantially higher than available through other traditional retail brokers. And now you know what is social trading!

Learn to Trade Forex | Learn to Trade Stock Markets | Forex Trading Signals | What is Social Trading?

Market quotes are powered by TradingView.com