Benefits Of Social Trading : Trading Made Easy For All
We’ve all heard about how rapidly the social trading industry is growing and how it will be the future of trading. But what are the reasons that make social trading attractive to traders? What are the benefits of social trading?
Beginner traders are the ones who benefit the most from social trading. That being said, all kinds of traders can advantage of this unique trading method.
These are the questions we will answer in this article. Additionally, you will get a basic understanding of social trading.
Let’s understand what social trading is, before reading about its benefits.
What Is Social Trading?
Social trading is one of the fastest and latest growing trends in the world of financial trading. It the form of trading where traders can copy and follow trades of the top and expert traders.
Social trading was mainly introduced so that new traders could interact and learn directly from the expert traders and make trading more sociable in general.
The modern-day social trading consists of a fully featured social trading platform with a vast community of traders from all over the globe.
There is back and forth exchange of information, ideas, and tips between them. More about social trading in our in-depth coverage on social trading and its features.
But social trading didn’t start this way. It has a long history which originated from emails.
The modern-day social trading has many benefits to offer and is the main discussion theme of this article.
What Are The Benefits Of Social Trading?
Now that we have understood what social trading is, we can take a look at what advantages you can expect from social trading.
If you haven’t tried social trading yet, here are the advantages social trading offers:
Trading Made Accessible To All
With social trading, the main benefit lies in accessibility to trading by all. It was made with the premise that everyone should be able to trade regardless of their trading experience.
When a beginner joins a trading platform, he will feel confused and intimidated by everything that surrounds him.
The dilemmas include which assets to choose from the thousands, should he buy or sell, when to set a stop loss, which technical indicators to use and much more.
These obstructions may restrict him from engaging in trading at all. Demo accounts may help in this case but trading knowledge and experience is a must to succeed in trading.
All of these issues are solved by social trading. The new trader can interact with other traders and learn from them. He can copy their trades and learn their strategies.
It Is Absolutely Free!
One of the best things about social trading is you do not have to pay anything to interact and learn on the social trading platforms.
Everything is transparent and readily available for you to access.
You can access the strategies and tips of top traders without even making a deposit.
All you need to do sign up for a free account and you can explore the social trading community without any restrictions.
Social trading gathers the top traders around the globe together making the flow of information easy. All of this being free just adds a cherry on the top.
The Information Is Reliable
Well, it’s great that the information and strategies are free, but is it any reliable?
With the power of the internet, a simple search on trading strategies and information will provide you with thousands of articles.
But we all know, amongst the clutter, only a handful of information is reliable.
Most sources don’t provide any kind of proof or visible results that you can rely on. This is not the case with social trading platforms.
Here, you can view the entire portfolio and trading history of traders. You can see how much profit they have made over a certain period of time, which trades have made them money and which ones caused them to lose money.
If they are consistently making profits, that is the proof that their strategy is working. Transparency is vital when it comes to building trust.
It Is Beginner Friendly
All a beginner trader needs to do is join the social trading network and start following the top traders.
He can then learn by following their actions. You will be surprised how fast new traders gather to learn and gain experience just by following the top traders.
Learning theoretical knowledge without practicing it is far less effective than practicing trading first-hand.
They gain direct access to the best strategies and tips and hence learn faster and eventually, become experienced traders themselves.
Saves Time And Money In Learning
This point goes hand in hand with the previous one. Social trading has proven to be one of the fastest mediums for beginner traders to become professional traders themselves.
With the advent of social trading platforms like eToro, ZuluTrade, etc there have been many success stories of novice traders turning their trading game into a profitable one with the help of social platforms.
And you don’t have to pay any extra charge or fee makes it an attractive choice for beginner traders.
Additional Income For Top Traders
The income source for top traders is not just limited to profits from their traders.
In social trading platforms, the top traders earn a percentage of Assets Under Management ( AUM) or profits of the traders that copy or follow them.
This is a win-win situation for everybody as more followers/copiers for them mean more additional income.
In some social platforms, they feature the top traders separately to make them more accessible.
On the other hand, the copiers are also earning profits by copying their trades. The broker that provides the social trading platform gets bigger in numbers and income.
So, everybody benefits from this and this creates a positive trading ecosystem.
Easy Income For New Traders
As discussed above, new traders are earning profits by simply copying what the top trader is doing.
By copying their positions, they are earning profits that would’ve been difficult for them to earn by themselves.
Only in social trading, you can earn without any prior trading experience or having a definite strategy.
A Vast Variety Of Trading Strategies
Social trading platforms bring together the best of trading strategies all under one place. Traders get access to thousands of trading strategies and choose their preferred one.
Even if you are an experienced trader, you can benefit from the array of strategies to improve your trading game or try something new.
With social trading, you get to learn new trading strategies that you previously were not aware of.
Risk Reduction And Management
Through social trading, you are eliminating the risk of trading by yourself and risking your hard earned investment, especially if you have just started trading.
Trading on social platforms also allows you to assess your risk and helps in risk management.
Before following a trader, you can view their risk score and decide if you want to undertake that risk.
You can also utilize the market sentiment which indicates if the majority of the traders are buying or selling.
A Strong Network Of Traders
With the help of social trading, you can interact with other traders of similar interests and goals and form a strong network.
This can be useful outside of trading as well. These traders could be part of a potential business collaboration in the future.
In this article, we discussed on the various advantages that social trading offer to its users.
The social trading community is growing rapidly and it won’t be long before social trading becomes the trading norm.
It has proven to be useful for beginner traders in learning and earning. Social trading can be seen as the pathway to introduce more people into the world of trading.