Online Forex trading, though very easy to get started, is not so easy to master. A lot of people who want to make instant money, directly start with the online forex tools without having done their homework and end up losing money.
In the good old times, there was always a broker, market analyst or portfolio manager who assisted you with your stock, commodity or forex trading activities. With the web technologies – especially with its social media aspects – bringing traders very close to the market and fellow traders, there’s this new emerging trend of social trading – especially in the online forex trading space. Let’s understand what is social trading!
What is Social Trading?
Social trading is all about doing your online trading (be it stock trading or forex trading) based on what traders and friends around your circle is trading. In other words, instead of taking help from analysts and brokers for good recommendations, you rely on your social circle of successful traders online and just copy what they are doing in real time.
If that explanation did not help, take a look at the picture below. This shows how one of those social trading platforms (eToro Open Book in this case) typically work.
Basically you can do your trades exactly like what successful traders are doing by just copying their latest trade. The forex trading data will be appearing real time in a scroll window for you to see latest activities. Once you copy a trader, that particular trade is linked to the actions of the trader that you copied and your positions will be closed when he does the same and reap benefit. Essentially, you make as much gain as the successful trader makes and in the case of an adverse market condition, you restrict your loses when the expert does the same.
In addition, you can follow your favorite traders, track top traders and even check the details of their past trades. Basically you can build a portfolio based on another successful portfolio of real people available out there. Hope it is much clear now.
eToro is one of the pioneers in social trading and they have a well integrated set of tools like the trading platform, social views (Open Book) and portfolio builder (CopyTrader) all available in one place. In addition their mobile trading platforms like the eToro Android Client, has all the above social trading functionalities built into it as well.
Now, is social trading guaranteed to be successful? NO, if you are following and copying the wrong people for your trading inspirations. If you want to get into social trading the best thing to do is to really watch and study what people are doing for a few days or even weeks and then take a plunge.
And needless to say, you need to know the trading terminology, knowledge on how to trade and some ideas on fundamental and technical analysis before doing any trading activities. At the end being social, helps you to know what people are doing it’s your call whether to follow them or not.
If you want to know more about forex trading, please read our article on forex trading for beginners. Otherwise, you may practice Forex trading with $10,000 virtual money using the link below (without putting your real money)
Happy Social Trading!