Social Trading for a new generation of Forex Traders
Since the end of 2014, there has been an explosively growing number of traders engaged in Social Trading.
How does Social Trading work?
Trading is done in the same way as with brokers such as Pepperstone. You select a currency, set a volume, choose a stop-loss and take-profit and place your trade. You can do this based on your own expectations, but you can also choose to follow the trading pattern of another trader. In that case, you choose to place your trade as a follower and the rest will happen automatically.
With Social Trading you can just stop your trade when you think the price is turning against you or you wait and see what the trader you are following is going to do. So you partly outsource trading. Hopefully with the result that the trader you have chosen makes the right decisions.
View other traders
The most specific characteristics of social media can also be found in social trading: you can follow other traders and others can also follow you. That way you learn from each other and you can easily keep up to date with what is going on in the world of Forex trading.
Other traders follow
Besides watching other traders, you can also follow them, or rather: follow their trades. You can do this by just keeping an eye on them, but eToro also offers the unique opportunity to automatically trade with other successful traders.
Automatically copy other traders
If you see a trader who is doing very well, you reserve an amount of your trade balance for this trader and you automatically follow the trades he or she places. In addition to viewing, tracking and automatic trading, you can also connect with other traders by sending them a personal message through their profile page. You can stop and adjust your copied trade at any time and of course decide to stop following a particular trader.
Benefits Social Trading
I think the biggest advantage of social trading is that you get the hang of Forex trading much faster and easier. In addition, you automatically collect the most relevant current information that can be important when placing your trades. An economic calendar is still useful, but via social trading trend changes, news items and special events will reach you much faster.
Disadvantages Social Trading
Many experienced Forex traders look a bit down on social trading. They believe that social trading is no longer about the art of trading, but that social activities play too great a role and this increases the risk that wrong choices are made.
Although there is certainly something to be said for the argument that social trading is no longer just about trading, I think that this way of trading can help young, starting traders in particular to develop their trading skills enormously. I even think that in the coming years there will be a division between Social traders and the established way of trading.
Social trading will offer more opportunities, more tools will become available and no doubt new strategies will also be developed. Social trading has arrived and will play an increasingly important role in the Forex world.
