Social forex trading is very popular nowadays because it has made trading much easier. It was initially created to stay in touch with people who have the same interest. Namely, Forex trading. Over time, copy trading or copying other traders’ moves in trading became an advantage in social trading. With this added feature in trading, forex trading became open and more and more people are doing it.
We already know how copy trading works. The retailer will open an account and link it to the account of the trader and whatever the trader does, it will be copied automatically to the retailer’s account. So if the trader gets a profit, the retailer gets a profit as well.
There are other features in social forex trading that are very useful as well. Remember that there are a lot of markets in trading. With the social trading review, you can view the accounts of traders with specialties such as crypto trading and study them. You can opt to observe their strategies and how they trade instead of copying them so that you can do the same thing in the future if you choose to trade in the same market. This is why social forex trading can be done by everyone. Gone are the days where people who would like to trade have to undergo some training or get courses to understand how trading works. With social trading, all you need to do is sign up and start observing traders. After which, you will have the option to copy trade or not.
1. You don’t need to spend a lot of time learning the trade – with social trading, you can do trading immediately because of the copy trading feature.
2. You can share your knowledge about the trade to others– just like social media people share their ideas, observations and stock knowledge about forex trading. Of course, just like social media, you will need to use your common sense when evaluating information and spending your money on which stocks to purchase.
3. You have the potential to earn more than your share of your stocks – If you become a copy trader, you can get 10% of the profit of your copier. You will need to be successful in trading in order to get the 10% commission from your copier or else you won’t get any at all.
4. No 3rd party dealers – All the trades are copied directly so you don’t need to pay any third party agents unlike what people in the stock market floor.
5. Meet people – since you can connect with people using the social trading platform, you get a chance to interact with more people and making friends along the way. You can also invite your friends on social media apps to join you in doing social trading.
There are a lot of social forex trading platforms available and one of the best social trading platforms that I would recommend is eToro. In fact, when you say social trading, it is always associated with eToro because it was the first online broker that introduced the concept of social trading.
It’s very easy to start social trading with eToro, A newbie trader can do copy trading almost immediately because eToro has shortened the learning curve in forex trading. The app itself is very easy to use and tutorials are available for you to use.
I know that you might be a bit skeptical because there are a lot of scammers out there that don’t deliver as promised. Etoro is a legitimate company and I would recommend it to anyone. Try to read a social trading review and I’m sure eToro would be mentioned as a legit social trading software.
In fact, eToro has several licenses namely:
• eToro (Europe Ltd with registration number HE20058 regulated by the Cyprus Securities and Exchange Commission (CySEC), license number 109/10.
• eToro (UK) Ltd is regulated by the FCA or Financial Conduct Authority and has the company reference number 583263.
• eToro AUS Capital Pty Ltd with license number 491139 under the authorization of ASIC or Australian Securities and Investments Commissions and provide the financial services under the Australian Financial Services with license number 491139.
eToro has been on the market since 2007 with hundreds of employees and offices all over the world. If you are living in the United Kingdom and you are an eToro premium client, you can ask to become a client of eToro (UK) Ltd instead of automatically becoming a client of eToro (Europe) Ltd which is a standard when you deposit your money in eToro.
Whenever you make a deposit on eToro, your money is deposited in separate accounts in first-order banks and does not end up in eToro’s personal accounts. They are deposited in the separate account is required by regulated brokers in order to make sure that the funds will not be used by the broker for any other reason in case the broker is bankrupt.
If you register in eToro, you are not only opening a trading account in a brokerage firm. You are entering a very large community of aspiring expert traders. eToro social trading is a social trading platform that you can do a lot of things with.
• Operate on different trading markets or do retail trading. Retail trading markets that you can choose from are cryptocurrencies, stocks, currencies, indices, ETF, and commodities.
• Follow and observe other traders just like what you do in social media. With just one click, you can also copy them or do copy trading.
• Do social trading or participate in sharing your knowledge in trading and making investments with the eToro community.
• Create a copy portfolio and become a copy trader so that aspiring traders can copy you.
• Earn in CFD operations. Since eToro is just like social media and can be accessed by anyone, you can interact with other people and ask for advice. You can even share information that has been shared by other traders. You can also view the success rate of the traders and what they did with their investments in the past letting you decide which trader is best for you.
Tips in Choosing a Social Signal Provider or a Copy Trader
There are a lot of social forex trading signal providers available in eToro. If you want to check them out, feel free to do so, but beware because there are a lot of scams out there that are only after your money. Here are things to consider when looking for a social forex signal trading provider:
• If it’s too good to be true then back out. There are social signal providers that will promise you a huge return in just 3 months. This is not how social forex trading works. You need to use your own judgment in social trading on where your capital will go. In fact, there is no guarantee of a huge return in just a short span of time in social trading. It takes a lot of time. If they have a large return on investment in just a short span of time, chances are they are over leveraging their account and it will have a huge impact in the future.
• Choose a social signal provider that has real accounts. There are people who have the same interest as yours. You should also be able to see their past history and how their investments faired in the last year.
• Choose a social signal provider that has a long track record because they are the “experts” in the field. Newbie traders who have gained a lot of returns may only have a stroke of luck in their investment and don’t have the experience needed to know when to sell their stocks or add more money in their investment. The trader that you will choose should be someone who has been through a lot of market conditions. Choose someone who has been trading for at least a year with a good track record so that your investment will be safe.
• If your social trade is doing well, don’t be surprised if the copied trader is compensated with a portion of your income. Remember that you are not doing anything, but copying their trade so it’s natural that they get a portion of what you get as well. It’s a fair trade. Don’t worry, if you are not getting an income nothing will be taken away from your capital. Copy Traders do their best in trading because of a possible 2nd income from your capital.
• Choose signal providers that have a professional background. They are the ones who had a lot of training and experience so they are likely to succeed because they understand the stock market better than the others.
Social Trading Risk Factor
If you are investing in social forex trading, remember that it’s not a sure thing. A lot of people will spend a lot of hours looking for the best signal provider that is a good fit for them and spend all their capital to that signal provider. This is not a good social trading practice. Look for several good providers and invest in them to balance your portfolio. Talk to your copy traders so that you will know what they are doing if you are confused with what they are doing. eToro will also let you set your risk limit on your account to reduce your losses.
Of course, be ready to have losses when you invest your money, but the good thing with eToro is, you can reduce the risk of your losses. It’s up to you on how much you are willing to lose. Once it reaches its limit, it will automatically stop investing your money on that certain stock so you can invest in something else.
Don’t worry if you have losses. It’s natural in trading. The most important thing is, you don’t quit because social trading is a high risk/ high reward investment. If your investment doesn’t work the first time, you will have another chance at another trade. Give it time and you will find the right signal providers in social forex trading.