Social trading, or copy trading, is becoming a trend in the forex market lately. However, not many traders can distinguish social trading from copy trading. Yes, they are two different things. Therefore, the topic of my article to day is social trading vs copy trading. I will talk about the definition as well as the pros and cons of each feature.
Social trading vs Copy trading
Social trading is like a social network. In that network, forex investors can copy the trades of other forex traders. Besides that, they can discuss with each other about the forex market like news, events, and trends. They will give analysis and predictions about the market and share them with each other.
Copy trading is simply an act of copying another trader’s entire forex trading strategy on a platform. You can copy multiple strategies from different traders at one time. It can be easily understood that copy trading is a feature of social trading.
Social trading is perfect for forex beginners to learn. They have the knowledge about forex trading, but they don’t have experience. In the forex market, experience is very important. Social trading is the perfect place for them to learn from the best forex traders.
If you want to start a career in forex trading immediately, you should try social trading. Otherwise, you have to spend a lot of time learning and gaining experience to start making real and steady profit. On the platform, you can find a lot of trading strategies from different traders. You don’t need to test them anymore because they already did that for you. You learn from the professionals, analyse their tactics and then develop your own.
Social trading platform is where everyone share their ideas. They could be good or bad. So you shouldn’t follow them blindly but rather learn slowly and carefully to figure what’s best for you.
Social trading is for people who are serious in trading forex. They want to shorten their learning time so they learn from the experienced. On that platform, you can easily find the trading history of other traders and then learn from their mistakes as well as repeat their success. If you are not really into learning how to trade, copy trading is for people who just want to make some money.
About copy trading
Copy trading is suitable for investors who don’t have much time for learning to trade or people who are scared of trading because they have lost so much in the past. When you decide to copy trades, you are not a trader anymore. You are now an investor.
Copy trading is very simple. You go to a platform. You choose a strategy from a list of traders based on various aspects. And it’s done. Everything happens in their accounts will also be applied to your account.
When investing in a forex strategy, you should pay attention to some key points below. Pictures are taken from Exness platform, which I’m currently copy trades on.
On this platform, the profit rate will be calculated by Exness each month. It shows how much that trader has made from the initial fund. Remember that how much you win is based on the ratio between their fund and yours. For example, if they put in $1000 in their account, but you only deposit $100, you only earn 1:10 of what they earn. If they make $200 profit, you only make $20. Very simple and fair.
This is an important part. Risk score is calculated by Exness by comparing how much they win to how much they lose. The score ranges from 1 to 10 with 1 is the lowest score.
What all investors should know is that never follow only one strategy. You should follow multiple strategies at once because this market is very volatile. If one strategy loses, you can make up to it from the others.
Of course you can’t copy their trades for free. You have to pay a percentage of your wins. 30% or lower is the acceptable rate in this market.
Conclusion: Social trading vs Copy trading
To summarize, you can see that social trading is for anyone who is serious in forex learning. Learning from others is the fastest way to succeed in this market. Meanwhile, copy trading is for investors only. Forex copiers should follow risk management plan strictly to avoid losing all your money on one bad day in the market.