What is social trade?
Like so many Internet call words,is thrown around quite often (and quite loosely). While there are those who will soon be synchronizing “social trading” with everything and the end of online trading, many traders are still wondering “what is social trading?”
Basics of social trading
Let’s get to the basics: in essence, about sharing information. While all traders in the Community Trading Network maintain their private trading account, in order to participate in social trade, they agree to share certain details about their trading activities.
The downside, of course, is that no matter how many times the wisdom of the crowd wins, there will be times when it fails. It’s always best not to blindly follow the stock, but rather consider data from your social feed along with traditional market information sources.
Most social trading platforms broadcast live information generated by their network through “live feeds” – similar to the feeds you usually see on Facebook. However, some also lend additional elements to provide you with more focused information and even data analysis. For example , one of the most popular community trading platforms, collects live trading data to create a “profile page” for each trader, which includes trading statistics that give a clearer picture of how successful each trader’s strategies are.
Copy trading: taking social commerce to a new level
Combining aspects of online commerce and social networking is good, but when asked what social commerce is, most people will answer: You can see that while live streaming information is a nice addition to any trader’s routine, copy trading is truly a game-modifying way to invest in markets. This is a way to make practical use of the know-how of other traders and use it to promote your own trading game.
As you may have guessed from the name alone, copy trading is the copying of other traders ’trades automatically – or semi-automatically – depending on the individual as
At the most basic level, this involves selecting merchants to copy and deciding how much money you want to invest in copying them. The trades are then automatically copied with the proportional investment amounts based on the percentage of the funds invested in the original trade. In a sense, copy trading is similar to a managed account (in fact, several regulators have officially classified it) – even though copy traders don’t work directly for you, it essentially lets someone else make the trading decisions for you.
How is social trading different from other automated trading strategies?
For starters, community trading takes trading decisions out of his hands and puts them in the hands of another person instead of an algorithm – for better or worse. Even better, because a real person puts their own money on the same investments, it gets an extra incentive to perform well and because it adapts flexibly to live market situations. What’s worse, because, as a person, they are prone to human error and emotional outbursts.
However, the real difference and the real benefit of community trading is how much control you have over your account. With an algorithm or robot trade, once you have handed over your funds to the algorithm, you can no longer make any contribution to the development of your positions.
The same is not true of the copy trade. Many platforms allow you to take a number of steps to control your “copy connection,” from being able to make stops and accept profit orders to manage risk, until you have the opportunity to take over copied transactions – thereby breaking the connection and the original trade and completely in his hands.
This is an area where different social trading platforms differ greatly from each other, and these differences can be significant disruptive factors in choosing a social trading intermediary.
So, what is social commerce? It’s about getting in touch with people and giving you the tools to use the knowledge and know-how of others to your advantage. How much you want to rely on others to make your trading decisions is up to you. You may want to simply use your preferred social trading network as an indicator of investor sentiment, or you can invest most of your account in copying different traders, there is no right or wrong way to do this.
The key is to understand the benefits of social trade and the risks involved so that you can make the most of your experience in social trade.