The 5 Pros and the 3 Cons of Social Trading

Like social media in our everyday life, social trading has become part of the investing world, and it is here is to stay.

Ten years ago, that was an innovative concept that puzzled most financial experts. However, the simplicity of the idea – a platform where the vanguards of the financial markets can show off their best-performing strategies and offer others to copy them for the commission has grown into the hearts and minds of the people in the industry.

In today’s world caught in the uncertainty of the pandemic with a quivering labour market, social trading is capturing the attention of more and more people. It offers them an alternative source of revenue without the need to have any experience in it.

So, is forex social trading that good? Here are the top 5 reasons you should consider exploring the option and the three that you should always keep in mind when participating in the financial markets.

Pros:

1. You don’t need any experience to start with social trading

One of the greatest advantages of social trading is that it offers opportunities for complete beginners. If you’re interested in making some extra money on the financial markets, but you don’t understand how to read charts, build trading strategy and more so, you don’t have the time to study all this, and social trading might be the right choice for you.

The idea behind social trading is to make it accessible to as many as possible people, so most of the trading platforms offer a user-friendly interface, and there are easy to navigate. Your journey starts with creating a profile and applying your settings.

After you create your profile, you can start following the top-ranking traders, browse the variety of trading assets and participate in discussions and chat rooms. It is up to you if you’d spend some more time observing the opportunities or jump into action from the start. This brings us to the next benefit of social trading.

2. You can start trading immediately

Once your profile is verified and you have submitted your initial deposit according to the social trading platform rules and conditions, you’re good to go. If you feel confident enough, you can start copying the trading strategies you like, follow their performance and hopefully start making some earnings.

3. You learn from the leaders

Regardless, if you just wish to keep making some extra cash by simply copying the experts’ trades or you’d like to learn more about trading and eventually become an expert trader yourself, you’re off to on good start.

Social trading platforms offer access to sophisticated traders with many years of experience. And apart from simply copying what they are doing, you can also interact with them through live chats and expand your knowledge.

Additionally, social trading platforms often include an educational hub where there are plenty of materials and videos to help those who wish to advance in the field.

4. You learn by doing

As in many other areas, the more you practice something, the better you become at it. Through social trading, you might never reach an advance proficiency level without adding extra effort in studying. Still, you can improve your knowledge significantly.

5. You can have a lot of fun while making money

Last but not least, social trading could be enjoyable. You become part of a community of like-minded people sharing thoughts and opinions. The dynamic of the financial markets makes trading very exciting, and with the improvement of your skills and understanding, you would be able to enjoy the process more.

Cons:

Trading and investing in the financial markets carry significant capital risk, and you should never forget that regardless of the way you decide to join in. Here are three main points you should keep in mind when it comes to social trading.

1. Not all that glitter is gold

The social trading opportunities are avalanching. However, when selecting the platform, you should perform strict due diligence. Keep attention on the risk management, the customer support service, the funding methods, and the withdraw policy.

2. It will take years to become an expert

If you intend to become a professional trader, then perhaps social trading is not the best opportunity. As we mentioned, it does provide a certain level of a learning curve; however, the primary purpose of social trading is to provide possibilities for investors with no experience.

Therefore, if you intend to specialise in the industry, you should search for other ways to learn and improve.

3. Don’t get your expectations too high

Social trading offers many opportunities for making good revenue. However, as with anything, you shouldn’t expect to make a splash from day one. Arm yourself with patience, spend enough time monitoring and observing what others are doing and copy the trades that appeal to you.

Find out about copy trading.