The popularity of copy trading / social trading

Social trading is also called copy trading. More and more traders are using this way of trading. It gives small and intermediate traders the ability to track successful traders and copy their positions.

Major brokers such as eToro, but especially platforms such as ZuluTrade, are making social trading / copy trading increasingly easier and more accessible. Why is this form of trading so popular?

What is social trading / copy trading?

I just call it social trading. It's actually quite simple. You copy the positions of a successful trader. The trader gets a commission per copy trader and so is happy to share his / her positions with other traders, like you. You can use this to analyse the strategy, but you can also copy the same strategy and apply it yourself.

So you can:

• Copy a position.
• Copy a strategy.
• Choosing a certain spread.
• Copy the entire wallet.
• Carefully analyse the trading of the successful trader.

You don't have to invest exactly the same amounts as the successful trader, but you can get the same winnings. It is not an active way of investing, but a way to develop more skills in Forex investing.

Advantages and disadvantages of social trading / copy trading

Does social trading sound too good to be true? Maybe it is. Social trading is perfect for beginner and less experienced traders. It enables them to develop good strategies in an efficient and effective way. But also to analyse successful traders.

However, it does not stop there. You pay for this service. This is often a certain spread of the profit or loss that is achieved. So when the profit is minimal, but still positive for the successful trader, it could mean that you as a follower still make a loss because you have to pay a fee to be able to follow the trader. In social trading your profit margin is therefore affected.

Tips social trading / copy trading

• You have to make sure you get timely notifications so that you can quickly copy the successful trader. If not, you may be too late and the market has already changed.
• Accurately choose the successful trader you want to track. Do not choose the trader who makes irregular profits, but rather the trader who structurally ends up in the green numbers.
• Do not focus solely on the positions of the successful trader, but increasingly try to set up and follow your own strategy. In short: also act independently and keep your wits about you.
• You can choose to invest part of your portfolio in social trading and another part in your own strategy. That way you spread your chances.

Is social trading right for you?

Social trading is becoming more and more popular. Many traders make good money with this, without it taking them a lot of time or research. They don't even need advanced knowledge for it.

Social trading is mainly a way of investing when you enter part of your investments in this way. That way you keep the costs of social trading under control.

Make sure you have good arguments for following a successful trader. Don't blindly follow this trader, but keep your wits about it. Even successful traders make mistakes from time to time, but these mistakes cost you more due to the cost of tracking.

With these tips you can make social trading a success for yourself. So take advantage of the openness of the other. Until you yourself are followed by other traders as you become more and more successful in trading.