Social trading, also known as Copy Trading and Mirror Trading, is a relatively new way to invest online. It allows interested users to access information via social networks. Unlike what happens with fundamental analysis and technical analysis, with social trading the information is generated by other users. It thus allows newcomers to the sector to be able to carry out operations without necessarily going through the analysis phase. Let’s see how to use it well.
The Copy Trading or Social Trading system is a trading technique that has been known for years and is already widespread in other financial areas. Social trading is simply copying trading positions. It is a completely legal business methodology with which a kind of social network is established. All connected traders can then share their experiences and knowledge in real time.
Copying or even simply taking inspiration from other traders’ positions increases the probability of winning. Social trading also reduces risk margins. Social trading is an excellent opportunity to learn by copying the best traders, provided you choose brokers that are reliable, transparent and offer a plurality of services.
Copying positions in trading was first offered by eToro, and has completely revolutionized the way of operating in the markets. He transformed trading platforms into real social networks.
As in any social network platform, it is possible to search, follow users in the community, interact with them by exchanging messages and check the results obtained. On most trading platforms, it is very easy to find information because there are quality scores that determine the authority of each trader.
Once the best traders have been identified, it is possible to use the “Copy trader” function to replicate their operations. This implies that from this moment, each time the trader followed will carry out an operation, this will be replicated in your account with the same characteristics.
Before selecting a trader whose trading position you are going to copy, always remember that this person will have the ability to manage your money indirectly. It is therefore good to pay particular attention to the performance of past operations and to the strategies, aggressive or not, put in place.
It’s not a bad idea to invest time in looking for profiles suited to our needs: in short, you shouldn’t follow the first Popular Investor you come across on the platform’s social network. In this way, we will undoubtedly be able to obtain the maximum economic benefits.
However, the economic aspect is not the only opportunity for social trading. It would be really simplistic to think that you automatically earn money using this tool. Rather, the most interesting aspect is the opportunity to learn truly winning forex strategies, by observing how great traders work.