What is Social Trading?
Social Trading is nothing but the combination of trading practice + social network. Novice investors can join such platforms and learn from successful traders about the best practices to follow while trading. They can also interact with one another about the latest opportunities and trends to be followed in trading. Apart from that, the experienced one will share some trade secrets to the beginner one in exchange for monetary benefits.
One more benefit of social trading is the real-time gain. Traders can check each other’s trading practices in real-time for ultimate benefits. Also, the more experienced one can conduct strategy sessions with beginners for future investment decisions. By following such strategies, one can predict the market trends and major loss can be prevented.
This type of trading can be a mutual benefit for investors and traders and can boost the country’s economy too. Social trading often performed via software applications and platforms.
There are certain social trading platforms available to join such trading and excel in the investment market.
Copy Trading: A Successful Element Of Social Trading
Within social and copy trading platforms, traders can follow each other and also able to follow experienced investors. While following them, they can also copy their best practices of trade and in the choice of commodities to trade. This phenomenon is called “Copy Trading”.
Beginners have complete control over criteria to select while following experienced investors. For example, they can select to choose from people with higher risk factor or lower in investment. They have all the access to follow whichever investor they like in terms of commodities portfolio selection. In return, most of the social trading platforms pay commission to experienced investors because of the larger following they have and the ability to invite more numbers of beginners to the platform.
4 Ways Social Trading Can Be An Ultimate Boon For Beginner Investors
- Multiple Sources of Information
By enrolling in the social trading platform, beginners have the chance to collect information from various sources. The context of the source is connected to following experienced traders. When investor follows a bunch of traders from different backgrounds, he will get quality information and new updates regarding trade best practices.
Also, they can check what other traders are doing in real-time by checking the latest updates. For example, if trader X is investing in Y stock, then by following him, the new investor can also do the same by just following his path.
- Leveraging The Expertise of Existing Traders
This point is the extension to the former one in terms of sharing expertise along with information. When the platform allows someone to follow experienced investors, they have the responsibility in return to share some expertise they gained from previous trade exchange activities. They can conduct webinars, live sessions, and post relevant case studies while sharing expertise.
While sharing expertise, traders have to keep in mind not to share any sensitive information about a stock that may create an adverse impact on the trade market and affect the economy badly.
- Increased Confidence
While following experienced investors, beginners will get confidence in terms of watching them performing trade exchange activities. Most of the time, they will learn from the case studies shared by experienced investors. Also, after investing for some time, beginners gain knowledge from their own mistakes.
Ultimately confidence arrives after one starts investing in the stock market. So, gauging one has a higher or lower amount of confidence can only be possible after they encounter certain experiences from trade investment. As a pro tip, the traders who just started their journeys can list down the experiences and share with the new one later when they will start their journey.
- Helping Social Community
Following experienced investors or sharing insightful tips to increase engagement with new traders is not just for one’s own good! It’s an exchange you are performing in the social environment. You are helping the community in understanding how the financial world is working and how investment decisions are made. Keep yourself up to date with the social happenings by setting up alerts using apps like Talkwalker, Mention.io, Hootsuite.
More than a boon, social trading platforms are the community of traders and investors.
As they say, “With great power, comes great responsibility!”
The experienced one does not see this as the opportunity to share fake advice in return for gaining commission and the beginner one should not ask sensitive trade secrets. While enrolling on such platforms, both parties have to adhere to rules before started trading.
Apart from that, one take precaution while financial interactions. After all, it’s an online space. When the investor joins such a platform, they must be aware of such guidelines apart from all the benefits that can be a boon for them.