Knock-knock- it’s 2017. Not 2007 anymore. The social media revolution is no longer, well, a revolution. As the social media platforms evolve, the Social Forex trading was unavoidably the next step. It’s a way of trading allowing users instant and constant access to information about the market through the power of the interconnected network we are all a part of nowadays. In social trading the information is generated by other embers of the network, which allows the newbies in the field to make trades without having to perform the analyses themselves. Essentially, you base your investment decisions on the data and analyses performed by others. The process enables you to seek or give help to others in your field, introducing a new social element of trading never seen before. Not only is social trading beneficial for new and experienced traders, alike, but it can also enable the shortening of the learning curve for the newcomers in the field.
Social Trading Basics
Social trading enables users to share information with other members of the community in real time. As this is one of the inherent benefits of the process, it allows new investors to monitor and then copy the trades performed by the veterans. This way newbies can see how experienced traders do business, why they take certain actions and what they look out for. Thus, social trading allows beginners to learn faster and in a real environment. Not only that, but it also gives them the opportunity to trade with “training wheels” or a “safety net”. In the past it wasn’t uncommon for a new trader to blow off all their funds before they even had a sniff of how to trade. Social trading reduces the chance of such an occurrence, although it must be said that it doesn’t eliminate it completely. Even copying involves a risk, and here is the evergreen tip in every investment. Diversifying. As with the regular day trading, diversifying helps shield yourself against the volatile movements of the market.
A typical example
To help you better understand what we are talking about here, imagine that you received useful information on your social media feed. Donald Trump is about to sign another ban. This is surely to affect the dollar. Another one of your friends informs you that due to a political scandal involving a company in Germany, or something like a speech from the UK prime minister, it’s expected that the Euro value will be influenced. If you are investing on the EUR/USD you need to move. You get the picture. Now expand this on a more global scale. We are sure that you might get such information on your feed, anyway, but remember: What you read on Facebook isn’t really that reliable (although if the people you know in the financial sector share information via Facebook, it might be just as good), but there are a lot of specialized platforms where you can make a registration and constantly receive updates on your feed in a real time. The real beauty of these specialized trading platforms is that you can easily check the credibility of the source by taking a look at their profile.
This makes it really easy to determine whether or not they are telling the truth or not. You can check their portfolio – if it’s good, then the information is probably legitimate and you can do the same. If the portfolio is bad, that might indicate that the person doesn’t really know what they’re talking about so stay away. As you can see, it’s relatively easy to get access to information and check. You can get the same information from forums, Twitter, Facebook, Google+ and other social networks, but the legitimacy there would be more difficult to determine. For this reason you need to use actual social trading platforms as a source of information instead of the unofficial channels. This way you know that the people providing information are into the field and you can easily determine how much experience they have and how well they’ve done so far.