In the past few years, online trading had a positive trend and the volume of transactions involved billions of dollars. This happened also thanks to Social Trading.
Seen as one of the most far-reaching developments in investing, social trading is years away from the days of stock tips whispered furtively between brokers and clients.
The Social Trading is one of the newest trends in the financial markets, through which people can connect, interact, discuss and make profits in real time as part of a community focused on trading.
Also called “Copy Trading“, this service allows you to interact in real time with other traders who are carrying out trading operations in that moment.
All investors can access and exchange information and tips on the best strategies to follow. In addition it is possible to share important information, such as analysis of financial markets, and copy the strategies of other traders.
The name derives from the fact that social trading is connected to social networks such as Facebook, Twitter and LinkedIn. More recently, a number of specialist investment platforms have sprung up. The list of the leading social trading platforms and networks involves: ZuluTrade, eToro Openbook, Ayondo, Currensee, FXPro SuperTrader and others.
The operation of social trading is very easy since it can be summed up in:
OBSERVE – FOLLOW – COPY – TRADE.
To succeed in social trading it is important to know how to identify the top traders. Taking part in social networks it is possible to easily identify the most successful traders with the highest percentages of profitable operations and total earnings.
Top traders are classified by currency pairs or commodities discussed and they are listed in a database based on profits, operating methods, strategies and risk level.
It is possible to diversify the investment portfolio by dividing the invested capital on more selected traders. The purpose is to create a portfolio made up of people, powered by a social trading based on the results, with a consequent reduction of the risk.
The actions of traders are different when it comes to beginners or experienced traders (guru).
The beginners will choose their guru; follow their moves; learn their methods of trading; copy their operations; keep an eye on the performance of each trader; interact with other traders to get advice and tips and ride the wave of investor sentiment.
The guru will recruit followers; gain recognition for their skills; looks at the actions of other gurus and discover new possibilities.
The main advantage of social trading lies in the fact that success is measured not only in terms of financial gain but also shared in order to let others learn and exploit specific trading strategies.
The best part of social trading is the availability of information: 24 hours a day, 7 days a week. Who you follow, what you learn and how to invest, are all things that depend on you.
Until the phenomenon of social trading first began to surface about four years ago, the investment process was conducted behind closed doors.
Now, social trading is rapidly becoming a way to connect with traders around the world. Based on the web, what all traders have to do is sign up and follow the rules.
When binary options became quite popular, social trading was also introduced in the forex sector and this completely transformed the way forex trading takes place. Social media is an effective tool for any broker.
Whether you are experienced in trading on the foreign exchange, commodity or index markets, or are just a beginner, social trading is the place to be and information is power.