If you’re new to the world of online trading, then you may be wondering about the risks involved, or not feel comfortable making all the decisions if you’re just starting out. One answer to this is social trading; a form of online trading that has rapidly grown in popularity thanks to companies such as eToro.
So, if you’re thinking about becoming more involved in online trading, and want to know more about what social trading is, how to find the right traders, and the risks and rewards then read on.
Social trading is basically a form of social networking, but instead of sharing photos and status updates, members swap trading ideas, interact with other traders, watch trading results from professionals, and brainstorm on market situations in real time. Social trading networks are great for less experienced traders, as you can make trading decisions based on those made by more skilled or experienced investors.
Of course, making sure you choose the right traders to follow is a big part of making sure that social trading works in your favour. There’s a large number of traders out there, each with their own particular trading style and methods, so how can you know where to start, and which trading strategies to copy?
It’s a good idea to look for traders with a proven track record of at least 12 months on your chosen social network. You’ll also want to look for traders who produce consistent results over time, and consider their trading style and strategy. You should also review their closed trades, examine whether they invest their own money in trading, and see how frequently they communicate with their followers. You can learn more about how to select the right traders for you, here.
There are several rewards when it comes to using social trading, with one of the main benefits being easy and quick access to reliable trading information when you need it. It also allows users to learn quickly and get a grasp on the market by copying seasoned traders, and you can start earning while building your knowledge.
However, like any trading platform, there are some risks involved, including unrealistic expectations of the gains you’ll make, poor risk management, and failure to put in enough effort (for example, traders may feel they can just copy trading facts without learning along the way).
Our latest development, Botwars, offers a fun introduction to trading and social trading platforms for players who may not have had much experience in this area. Players can talk to other players on the battlefield via battle chat, an open channel to all players in that market (ie BTC/USD). We’ve also developed a Clan feature, which allows groups of friends or randoms to collaborate, chat, and learn from each other. We’ve designed the battlefield and Clan chat so they resemble mini trading rooms, as well as social hubs for like minded traders. If you want to get started, download the Botwars beta app from GooglePlay and Apple App store.