What Is Social Trading? Strategies, Benefits, and Tips

It ultimately is a tool that can facilitate individual users to make more informed decisions on average than when trading on their own. Social trading is legit and does not directly carry any risk as the concept is to facilitate interaction among traders with a broker. The risk is introduced if you choose to copy the trades or strategies of other traders. This is why extensive due diligence is recommended on any trader or strategy you choose to implement. While it can enhance accessibility to financial markets, it is not a risk-free method and doesn’t eliminate the inherent risks in trading.

The most important factor when choosing how to use forex scalping strategies and indicators a social trading platform is to ensure your money is stored safely. The exact regulation and protection will vary from country to country, but look for platforms that are held to account for their actions. Copy trades are exact copies of other trading decisions, with trades executed in an automated manner.

Some people even go as far as to pool their funds, divide up research and share the information. Short-term trading styles can be very demanding, and by emulating others you can take a break from the intensive and exhaustive processes of doing the research for yourself. Social trading, and the similar copy trading, first hit the investment scene in 2008. It has revolutionised the way people invest their money, making the markets more accessible for lay people.

Open a real trading account

You What is a breakout should consider whether you can afford to take the high risk of losing your money. Forex, Futures, Options and such Derivatives are highly leveraged and carry a large amount of risk and is not suitable for all investors. All content (news, views, analysis, research, trade ideas, commentary, videos or articles) on this website or this website’s subsidiaries does not constitute as “investment advice”.

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1. There are many brokers to choose from, but only some who facilitate social trading.
2. In summary, John started as a new trader with no experience and used social trading to learn from successful traders and gain experience.
3. DNB supervises the compliance of eToro (Europe) Ltd with the Anti-Money Laundering and Anti-Terrorist Financing Act and the Sanctions Act 1977.
4. You will want to access information from recognised experts and the top investors in your networks to ensure the activities you are following have maximum chances of achieving success for you.
5. Users, on the other hand, shouldn’t simply follow the best traders.

Real-time listing of trader performance

It provides the MetaTrader platform, which has been designed to trade on any regulated market. When using real money it’s essential to keep the risk small – typically go no higher than 1-2% of your trading account’s value per trade. While social trading allows for less time management, you still have to monitor the traders that you’re following. When seeing how much money a professional trader has recently made, it can be easy to assume that free money is on the cards.

This means completing the KYC procedure and submitting proof of identity with a passport or national ID, and proof of address with a utility bill or bank statement. Here are a few important steps to follow in getting started with social trading. If a trader consistently underperforms or their strategy no longer aligns with your goals, consider unfollowing them. Following a trader means you’ll receive updates on their activities, but you’ll have control over whether to copy their trades. One of them, Michael, catches John’s attention due to his impressive 10-year track record of profitability. He notices that Michael is long on a particular stock and decides to go long on the same stock.

What You Need to Know If You’re Considering Social Trading

Aside from this, you can also choose to follow forex trading signals, information you collect from other trading communities, or data from one of many market sentiment indicators that are readily available. As a new trader though, it is often much easier to sign-up with a user-friendly, fully integrated, social trading broker. Social trading offers an innovative way for beginners to engage with financial markets.