Everything You Need To Know About Social Trading
Understanding Social Trading
Social trading is quite similar to how individuals use social networks. However, the idea here is to share trading information. This can include information about what is being traded, when it is being traded and how these trades are performed. Due to its transparency a lot of people have taken a keen interest in commodity markets.
Forex Online BrokerOne of the best things about social trading is that you do not need any experience whatsoever. It is as simple as copying the performance of professional traders. Not only can you copy their successes but it also helps lower the barriers to commodity trading. This gives others the opportunity to trade successfully even though they may not know anything about trading commodities in the first place. However, it offers greater rewards for established traders who can choose to operate as brokers instead.
Why Share your Winning Strategies at all?
There are plenty of reasons why individuals choose to share their strategies and tactics. Some of the most common reasons include getting recognition, to get more involved in the world and the need to feel part of a community. However, latest findings have indicated it has more to do with feeling empowerment and receiving validation.
If you’re new to social trading, how do you know which trader can be copied? As complicated as it may seem, it is actually quite simple. Here are some tips that should aid you in selecting the best traders out there:
1. Look for traders who have been trading for at least 12 months. The longer their duration as a trader, the better it is going to be for you in the long run. However, you will still need to evaluate their performance based on different market conditions.
2. If a trader is not performing as he/she should be, cut your losses and drop them immediately. This will actually free up equity so that you can invest in an even better trader than before.
3. One of the best ways of finding the right trader is by analyzing their winning percentage. Anything above 80% means the trader has a higher drawdown risk as they are holding onto losing positions until they turn positive again.
4. The number of people with ‘real money’ following the trader can tell you a lot about them. The more, the better. Not only is it a key advantage of social trading but it also gives you the chance to find out more about what other investors are thinking and doing.
All in all, considering the ever-increasing popularity of social trading, it is no surprise experts claim it to be the future of commodity markets. Now that you know everything there is to know about social trading, it is highly unlikely you will have any problems being a part of the community.