What is Social Trading and How does it work – Trade Socially

In the 21st Century we all witnessed to the explosion of a new phenomenon: Social Networks. With the availability of internet connectivity almost everywhere people started to spend more and more time on the web connecting to each other. In this article we will see what is Social Trading and how does it work.

 

First, the Social Networks

So what happened first? At the beginning of the 21 Century internet become more available, more accessible and more affordable, attracting more people. People started to spend more time online, connecting with each other, browsing for information, making and expanding businesses. At that point some smat individuals saw a new way for people to interact, sharing statuses, photos, events, videos and so on. That was the start of Social Networks like Facebook, Instagram, Twitter, LinkedIn, Google+ and many more. The key is Sharing.

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What is Social Trading

The sharing phenomenon arrived at some point to spread also to the trading world. Traders started to share information and tips regarding possible trades, setups and trends. Social Trading is where traders share their trading activities so that other investors or individuals can follow and copy them. Social Trading Platforms were created to make it easier to share and follow other people’s trades and a new way of trading began.

 

How does Social Trading Works

Social Trading has a very simple mechanism. When we talk about Social Trading there are always two parties: the trader who shares and the trader who follows. The trader who shares gives information and trades to other traders. The trader who follows can get information and even copy the trades performed by someone else.

Imagine an experienced trader and a beginner trader sharing a desk, they sit next to each other. The experienced trader can talk and show all of his activities to the beginner so that the last can learn and even profit (or lose) as the experienced is doing. With Social Trading this is exactly what is happening but on a larger scale. Experienced traders can share their trades on the Social Trading Platform so that other traders can follow and copy them. Consider that the most popular Social Trading Platforms have thousands if not millions of traders.

In the Social Trading Platforms you will be able to see details about the traders to copy. You can see their approach to risk, profitability, past results, instruments traded, past trades, trading style, drawdown and other statistics. All this information will allow a trader to decide who to follow and copy.

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Who can benefit from Social Trading

As we mentioned before, there are two parties involved in Social Trading and they can both benefit from this activity.

  • The Trader who shares the trades can generate an additional income, the trading platform in fact pays a trader a bonus (and money) depending on the number of traders that are following and copying a trader. Furthermore if the trader is really good it will gain popularity and we all know that popularity can create more opportunities.
  • The Trader who follows can learn new trading strategies following more experienced traders. He/She can also achieve the same results as the more experience traders are the trades can be copied exactly as the other traders is executing them.

In short a Social Trading Platform increases the opportunities of making money and learn trading on the field.

 

Most Popular Social Trading Platforms

Over the years many Social Trading Platforms were created to satisfy the demand but only some can really stand out. We only want to mention them here and we will examine them more in depth in later articles. The two most popular platforms that are worth naming are eToro and ZuluTrade.

eToro is easier to access and use, it doesn’t need to install a software on a computer as the platform is completely web based.

ZuluTrade on the other side has much more options and customization and can meet the request of more experience and sophisticated traders.

Both offers the opportunity of Demo Accounts so that you can “test drive” them before invest real money.

Conclusion

Social Trading is an alternative way of trading where you can share your trades and/or copy other people’s trades. Whether you are an experienced trader or a beginner you can benefit from the use of a Social Trading Platform. You can improve your trading and even make money sharing your trades or copying from other traders (unfortunately you can also lose them but that is part of trading). You can test some social trading platforms joining and creating a demo account with them, check them out!

If you want some more ideas about how to improve your trading skills or make more money check the article Your Path to Make Money Trading the Forex.

 

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