Trading and investing in financial markets is a profitable activity. If done right. One wrong move can end up emptying your pockets. This is why most investors play safe, but the problem here is that they may not bring home huge profits. Risk rewards in these financial markets, the greater your risk the greater profits it brings.
But, this theory will not always work. Most investors lose their direction because they’re confused on many things such as where to invest and when to invest. If they have an expert guide, who can guide them through the ups and downs of the trading world, they should in theory perform better, right? Digitalization has brought changes in many industries. It has brought people closer to the leaders they admire and idolize. They can now get valuable advice, suggestions and improve their knowledge by participating in discussions, tips etc.
Learning takes a lot of time and there is no guarantee that learning all the theory will help you to crack it in the real-time market. This is where social trading comes into the picture. So you might be wondering what is social trading? It is a platform that facilitates both social network and trading. Investors/traders interact with fellow traders or experts in the industry and discuss markets and trades.
Social trading allows you to observe other trades in real-time. This will help you to become a successful investor. It is beneficial for both experienced and beginner investors. With these social trading platforms, you can pick up tips, strategies from other investors in the trading community. You will get all the insights, skills that you require to become a successful investor. This has become the current trend as people without solid financial background are also making profits by copying the top investors. They’re making huge profits with no major efforts.
Here are a few tips that will help you in social trading
Find a social trading platform
There are many social trading platforms available in the market. No two of them offer the same services to the investor. There are many social media platforms available such as Facebook, Instagram, Twitter etc. Even though the purpose of them is getting people closer, but they differ in the services provided, so are these social trading platforms.
eToro and ZuluTrade are examples of two of the larger social trading platforms, but there are dozens to choose from depending on the requirements of the prospective trader. As an investor you must have an idea on where to invest and when to invest, you must use the platform that supports the investments that you’re interested in.
Investors can make finer decisions on assets that they’re able to research and understand better. Some platforms offer demo accounts, while others offer automatic trading or manual trading options. Since choosing the right social trading platform can bring you profits, choose a platform that works well with your lifestyle and provides you with all the specifications you’re looking for. You can also ask in the forum or community to know which new platform is providing the best results.
Use a demo account
You can’t fix something once it has already happened, all you is to take your time and do your research before making the final decision. Same applies to social trading. Once you start using the platform you may not be satisfied with it. Since it is a trading platform, there will be agreements, disagreements and discussions. Following these many voices and opinions may confuse your decision. So, to perform research and study the top traders of the platform create a demo account. It allows you to perform independent research and observe other traders in the platform. Demo account also helps you in getting familiar with the site and its functionalities. Moreover, it gives you enough time to study the social trading platform.
Copy-trading is investing in the same investments as the trader you follow on the platform. Simply put, you’re using the trader’s strategy to make a profit. But the question here is, how beneficial is this function? If used properly this can help you in making profits. But it has its own risks attached to it. Even though it is the easiest methods to trade, there is danger involved in this too.
Beginners may not understand the market well, they may feel happy that they’re making profits and follow any trader who is making huge bucks at the moment. But not always the trader will be right. As humans can commit mistakes, there is no guarantee that all their strategies will work out every time. They can also make wrong calls right? So study the investments and understand the record of traders. Copy-trading is a long-term strategy, but you must learn to invest on your own.
Track your traders
There are many traders in a platform. It gets confusing to follow whom for tips and updates. Whoever you choose there is always a risk involved. So, why not follow more than one trader. Traders may slip information regarding their strategies or help people in understanding the financial markets better. They have their challenges and stress points. Sometimes they get too overconfident and ignore all the updates and tips. In such a case, both you and the trader will lose out.
So, you must track the strategies of the traders but you must have an understanding of the market to make the ultimate decision. Don’t follow every other trader on the platform. Check their activity, account life and followers before making a decision. Always keep a backup trader, on whom you can rely in case a strategy fails. The traders understand the market and choose the right assets and transactions that would bring profit. All you have to worry about choosing the right trader who can guide you in the right direction.
Many may see social trading as a way to make money quick with minimum efforts. True, but if you want to see the success then you must have a long term planning like any investment or alternative. It provides investors with compounding gains. When you invest in an asset for high gains then risk automatically follows you. It is a gamble, you make either a big win or lose everything.
You can simply follow a winning trader and make similar moves as them to take home a huge profit. This is a short term planning. A person with long term commitment will understand the site and the market through a demo account. The trader’s research, analyse, calculate the profits and losses and start investing with a strategy of their own. Such traders even create contingencies against losses too. They see this as an investment portfolio that will bring profits in both present and future.