Social TradingCan You Really make Money Through Social Trading?
Social trading is now a trading tool in its own way!
In this era of online trading,the "web 2.0 socialization" has been around for some time, and has enabledboth expert and beginner traders make decisions not just by themselves, but through the sharing of theirtrade operations with the rest of the world, as well as learning trading methods of other investors. Some brokers have since then decided to create automated social trading programs, by providing their platforms with automatic sharing of trades.
How does social trading work?
With this system, expert traders share their trading operations which can be followed and copied by other "training" traders.
The first to activate this system was eToro, which launched its OpenBook in 2010. The principle of OpenBook is based entirely on real-time trading, since any trader in the platform can share his operations and review the transactions of other investors without sharing the amount of money invested or earned.
After that, many other brokers have created platforms and systems to follow this successful trend, offering more innovative features.The most important feature is the ability to manage the most profitable traders' ranking, sorting and filtering them based on time-related criteria such as trading type, results, drawdown percentage etc.
Some social trading platforms allow fully automated trading (without any manual intervention); while others require manual intervention whereby the trader receives a suggestion he may or may not follow.
The best feature of social trading
The most interesting features of these activities are the ones that allow tradersinteract and thus ask all the questions they want from other investorson the platform. Thanks to this flow of information, adapting to thestrategies of winning traders become easier, and above all the best way to learnmethods and strategies.
However, not all platforms allow this kind of interaction, which we believe is necessary if you want to start trading.
What is the advantage for the expert traders?
In most cases, traders who share their trading receive commissions by the platform itself for trading volumes generated by their follower. Obviously, if you have hundreds of followers this often results in substantial gains.
Recently this kind of trading has been limited by the financial market control as it often represents a very high risk for small traders, who follow well-known strangers who without credits call themselves experts.
Many of these “experts” deploy unfair mechanisms in order togain consistent followers and commissions. They do this by opening multiple accounts and place trades of different direction and strategy on each of them. When they observe positive returns on any of these accounts, they’re number of followers increase. At the end of the lucky period, they leave such account and continue working on other accounts, waiting for some of them to live another lucky day.
The advice we give is to try to follow the same tradersfor a reasonably long period without investing real money, until you see constant positive results.