Want to Take Part in a Trading Revolution? Read all About Social Trading Networks
There is a new kid on the block in the world of Forex trading, and it is causing quite a stir. Social trading is its name, and it is becoming increasingly popular. Why is this so? Because it is an easy way to get experienced traders to do all the hard work for you while you learn about trading completely free of charge. If you’re new to Forex trading it is an excellent way to start your journey; but it is also a way of trading that suits those with little time to spare, and those who would rather not spend hours sat at a computer analysing boring charts and developing strategies. Some might consider it is a rather half-hearted attempt at Forex trading, but we don’t consider this a very fair comment. There are millions of people jumping on board and tapping into the knowledge of more experienced traders.
Hoorah is all we have to say! Because now that Forex trading has become a more social thing, traders are choosing to share their successful strategies and not keep them locked away where only they get to benefit. It’s not just a good idea for those looking for a little bit of help, though. Traders and signal providers who provide the information get to earn commission depending on the number of followers, or of trades that are copied. And it’s not just about copying trades – there are also opportunities to join discussions, ask questions, and read expert traders’ posts.
The jury’s out as to whether social trading networks are able to increase trading profits.
Just ask your favourite search engine whether social trading is profitable, and you’ll get hits from both sides of the fence. You’ll also be able to read some success stories, and of course the inevitable tales of failure. In the interests of honesty and being fair to our readers, we will try and give you both sides of the story.
In principle, social trading networks are an excellent idea, and following the most successful traders seems the ideal thing to do. In the beginning, there were a number of hiccups with various software packages, but these seem to have been sorted. The difficulties with the human element, however, are not as easy to rectify. There are ways to lessen the problems, though. Many of the top social trading platforms use very advanced tools that can filter traders according to a number of different rules. They can also be used to pick out the safest ones. There are, however, no guarantees in respect of security, and as you may well appreciate, not everyone in the financial world is honest. There are always going to be a handful of crooked and shady characters whose only aim is to cheat the system and come out of the experience with big bucks. So how is it possible to pick out the sharks?
Tips to help you spot a scam
- Choose the more experienced traders to follow – A good guide is 1 year’s trading experience.
- If a trader’s results look too good to be true, they probably are.
- Avoid the traders who don’t use stop loss.
- Be very wary of scaled-out trades – It’s not a good sign to see losing positions together with old dates still open.
- You can tell a good trader by their willingness to take part in discussions, offer feedback, and openly discuss their strategies, as well as being honest about their losses.
- If you’re not 100% sure about a trader, it is a wise precaution to set your own stop losses.
- A consistent trader can be spotted by the steady gains in profit and loss charts.
- Before you start following a trader, take the opportunity to talk with them.
- It is better to use results in your own demo account as a criterion rather than those on a trader’s stats page.
Social trading networks are much more than just another form of Facebook.
Many of you reading this will have your very own Facebook page, and be completely au fait with how social media works. Social trading networks are a little bit different in that the emphasis is on trading. Other members of the trading network aren’t going to be in the least bit interested in what you had for dinner, where you went last night, or looking at a plethora of selfies. Members will have their own profile, but it will be about that person as a trader, not the colour of their hair or whether they are in a relationship.
When you sign up for a social network platform you will be able to see the portfolios of individual investors and look at how successful they’ve been. You’ll be able to see their investment choices and whether they’ve chosen to invest in a particular niche. You’ll also get the chance to check out how much money they’ve made, and whether they used a particular trading style. Best of all, you’ll get the opportunity to discuss it all with them, thereby learning at every step of the way.
We do, however, have a word of warning. You’d be a fool to believe everything you read on the Internet, particularly when it comes to social media, and social network trading is no different. It is perfectly feasible to misinterpret data, and there are plenty of people who will try and pull the wool over your eyes for their own personal gain.
Social trading networks are great– there’s no denying that. It is important to find the right platform and choose the people to follow very carefully, though. We often suggest that beginners start with a demo account, and the advice is no different for those of you considering social trading. Take the lessons on board and put in some practice to see whether what you’ve learned is relevant, and you’re going to be on the right road. There are plenty of opportunities and places you can go for advice and help, and we plan to do everything we can to assist.