Social trading and copy trading are emerging as phenomenons on forex market recently. They are fundamentally different from each other. However, many traders find it hard to identify and distinguish from one to another. Therefore, this article today will give you plain definitions of both of them as well as the advantages and disadvantages repeatedly.
Just like social network, social trading is a network that provide informational trading environment for investors. In this network, investors can share, discuss all information related to news, events and trends on the forex market. Each investor in this network can personally analyze and predict about the future of market and share the opinion with others. ‘Copy trading’ is just a feature of social trading. This term expresses the act of traders when they mimic totally the forex trading strategy of others on the network. Even more, they can copy broad strategies from many traders simultaneously.
Social trading is suitable for beginners who has knowledge but lack of experience in forex trading. With Social trading, they can apply their knowledge, practise and learn from the best forex traders to accrue experience. The more experience they earn, the more possible success in forex trading they will have. If you want to start the journey on forex trading career, jump on the bandwagon without procrastination. Instead of wasting a lot of time and money to gain experience by your own trading, there are a lot of dependable strategies from a team of experts. All you have to do are analyzing their tactical strategies, making up your own one and earning healthy profit. However, Social trading is the platform like social network in which everyone is free to express and share their points of view either positive and negative. Stay alert and aware of what is happening on the market rather than follow their ideas straight away to achieve the best results.
If you consider forex trading as a serious business, Social trading platform might be an ideal network for learning. You can search the trading history of other traders and learn from their mistakes as well as their accomplishment. By this way, you can reduce your learning time and lessen the risk of lost. On the other hand, you just want to make quick money, so copy trading could be an easier way for you.
In trading forex, time is money. But, if you don’t have enough time for learning and confidence for making decisions because of bad experiences in the past, copy trading is a good solution. The principle is simple, you go onto the platform, pick one trading strategy from potential traders and mimic it. All the consequences happened in their account will be reflected exactly in your own one. By efficient copying trading, you are now calling as an investor. There are some important points that you should carefully pay attention on Forex trading strategy. The pictures below are samples taken from Exness platform of a real trade.
The rate of this platform is based on the calculation of Exness monthly. It indicates the amount of profit that a trader earn from their primary fund. The notice for traders is that the ratio between their fund and yours will be the principle of the amount you win. let ‘s take an example. An input of $1000 into their account while yours is $100 will be a ratio of 1:10 of the earnings. So, every $200 of profit they make, you will win $20. It is simple and fair.
Risk score is assessed by Exness at the discrepancy between the amount of win and lose. The score ranges from the lowest at 1 to the highest at 10. As an investor, you shouldn't put all your eggs in one basket. This means, you should broaden the investment channel by following up more than one strategy. Despite the volatility of market and some strategies may get lost, you still have others to turn the table.
There is no such thing as a free lunch. When you win by copying their trades, you need to pay them a commission in percentage based on the amount of your wins. Ordinarily, around 30% is acceptable.
In conclusion, If you are serious in forex trading, go for social trading and enjoy the benefits of learning from professional traders. If you just want to make a quick money as an investor, go for ‘copy trading’. Carefully adhere to your risk management plan if you don’t want your money walk away in a bad day.