What is Social Trading? – Advantages and disadvantages of Social Trading
Social Trading is a practice that has become very popular in recent years as it offers many facilities for beginner traders who want to learn, as well as for the most successful ones who earn by sharing their operations. This is what helps novice traders, benefiting from their skills and knowledge. So today we are going to talk about the pros and cons of operating with Social Trading. Let’s go there!
What is Social Trading?
The term
social trading
can be used to describe the activities that an expert trader performs through social networks such as Facebook and Twitter, but in a specialized broker such as: Naga These markets have a reputation for low transaction costs, are easy to use and have with a large community of users who help each other. Therefore, Social Traders have a great affinity for trading on these platforms. As Social Trading has grown in popularity, some trading platforms have started to offer more advanced features and tools to help their users engage with their fellow Social Traders and interact with a large community of traders. Other trading platforms have incorporated features that allow users to buy and sell through Social Trading.
What is the difference between Social Trading and traditional trading? In traditional trading you own your buying and selling decisions. The normal thing would be for you to sit in front of the computer, look at the graphs, make your predictions and launch your investment. In this way you fully assume all the work and all the hours it takes to perform this exercise. In Social Trading you decide how much you want to invest, following the steps that another more expert trader has marked. This means that you do not trade blindly, and that you trade with the certainty that you are making a good decision.
The success of a trader you can copy is determined by their level of profitability. The higher your percentage, the lower your losses and the better profits you make from your trades. Do not see Social Trading as a fast and 100% safe way to earn money because… fast it is, but the security of your investment depends on the skill of others.
Pros and cons
Social Trading has several pros, but there are also some cons, like everything in life.
The
pros
of Social Trading is that you can earn a lot of money, and with that increase your capital more quickly. You can dive into the market and quickly get all the information about the market movements. You can spend time on other tasks. You can diversify your portfolio with other asset classes, which you would not normally trade.
The
cons
of Social Trading is that you can lose your investment if you do not choose wisely. You have to spend more time on your account, to see what level of profitability you are getting, and if it is what you expected. You have to continually monitor the market, you should not enter the markets without knowing what is happening, or what you are doing. Even if you are copying a trader, your duty is to know what he is doing when he makes a decision. And finally, if you don’t care about what’s going on, you’re missing out on a great opportunity to learn and become a trader who doesn’t need others to trade.
Conclusion Social Trading is a way of trading where the trader can learn from the experience of others and trade on the same platform as them. If you are interested in trying this method, we suggest you visit Naga, which offers you a DEMO account with €10,000 so you can test operations.
We hope to have helped you once again. Trade channel.