One of the most popular and fastest growing trends on the Forex trading market is social trading. In spite of its popularity, there is still a large number of people who actually don’t know how this system works. Also, people who haven’t ventured into Forex or stock trading may find social trading to be difficult.
Social trading is dependent on a social trading network that works the same way as a social media network. The only difference is that here people share trading outcome, while social media people share selfies.
The key thing is to find a prolific trader with a successful investment style and follow them. The moment you follow that trader, all their open trade will be copied into your account. This arraignment is better than hiring a trader, as you won’t have to give out your personal information to a stranger. Above all, the fact that traders can interact and share their experience and knowledge is superb.
Social Trading Mechanism
A compensation is provided to the signal provider for rendering their services to other traders. Sometimes the compensation is a fixed amount or a percentage of profit earned by the followers. Some networks do not charge a fee for those who copy, but rather charge a fixed broker commission. All signal providers are obliged to disclose all their trades truthfully, so there is no false details that can be provided to lure traders. The stats are availed for the traders to analyse before deciding to follow a signal provider.
Other than following a signal provider, these strategies can be a great source of information that beginners can follow and learn more about trading. Social trading is a win-win situation; the follower earns a big profit from copying successful strategies, while the signal providers earn more from their followers’ fees or profits depending on the arrangement made by the social trading platform.