Online forex trading has eliminated the need for traders to work on a trading floor, or to speak via telephone with their broker. Now, forex is traded online, which although is easier in many ways, there is the disadvantage of the lack of shared knowledge amongst traders. Whilst forex trading was once a social activity, the internet made the market a much more solitary place for traders.
That was until the development of social trading platforms that allow traders to connect with each other. If you’re just starting your research into the forex market, you’ll probably have come across the term ‘social trading’ already, but how could it benefit your own trading strategy?
Make Money on Autopilot
Many social trading platforms include an autocopy function, allowing you to effectively make money on autopilot by copying the investment decisions of other successful forex traders. You can choose which traders to copy, and leave the platform to automatically trade for you according to their strategies. Obviously this also means that if they make bad decisions, you could lose out, so spreading the risk across different rich, successful traders is always wise. That way, if one makes a bad decision, hopefully the good decisions of the others will balance out your profits and losses.
An autocopy function is ideal for those who have very little time on their hands, so if you identify yourself as somebody who leads a very busy lifestyle but would like to get into forex trading, social trading could be for you.
Utilise the Information of Others
Trading through a social platform means you don’t have to put as much work into your own analysis of the market. As a forex trader using a social platform, you can share your information and receive that of others for free to enhance your trading strategy. This means you are able to utilise the information and analysis gathered by other traders when making investment decisions.
For anybody who’s unsure about the effectiveness of their own research and market analysis, social trading platforms are a valuable source of information if you want to make sure you’re always in the know.
An Opportunity to Learn
When you’re just entering the world of forex trading, it can be a daunting place. The community element present in social trading is an attractive option for beginners who aren’t confident enough to go it alone just yet. That’s not to say that social trading is just for beginners though, and many successful traders use it to take advantage of the knowledge of other traders at a similar level of experience to themselves. For that reason, social trading is ideal for beginners looking to learn from successful forex traders as well as others who are just starting out.
It’s also an incredibly easy introduction into the market, as autocopy functions mean that new traders can earn money without having to risk using their own inexperienced strategies. Observation is still a key element for anybody wanting to use social trading as a way to increase their knowledge of the market though. So although it’s easier, if you want to become a pro trader, you won’t be able to just sit back and relax whilst the social trading platform does all the hard work for you.