What is social trade, or social trade in French? What are its advantages and disadvantages? What is the difference with copy trading? Find out in this article everything you need to know before immersing yourself in this new communal universe!
1. What is social trading?
Social trading is a form of trading where the user makes trades based on information and recommendations gathered from other traders through specialized communities, discussion forums, etc. In this way, the trader develops his trading strategies. Here the trader trades alone i.e. he makes his own decisions, rather than simply copying the trades of others. In other words, it works closely with other traders to assess the market independently, unlike copy trading.
2. What is the difference between social trading and copy trading?
In the context of social trading, the user himself makes the decisions regarding the transactions. This is not the case with copy trading. What the trader does in copy trading is basically connecting his account with another trader’s (master account) and automatically copying his trades. In other words, social trading is independent trading where the trader thinks and makes decisions for himself.
3. What are the benefits of social trading and copy trading?
- Social trading has clear advantages:
- the opportunity to get information and recommendations from other traders, learn from their ideas and grow as a trader;
- social trading is the ability to make decisions for yourself, monitor and close trades on time; it is also a good opportunity to control one’s own commercial results;
- the trader can save his time by conducting independent market research and analysis and developing his own trading systems.
- Advantages of copy trading:
- the ability to easily link your account to a master account and make money by copying profitable trades from another trader; in other words, by doing copy trading, you have the opportunity to have a full passive income;
- it is very useful for beginners: they do not have to spend their time developing their strategies, testing, controlling their emotions, etc.;
- the ability to check other traders’ stats before making decisions by joining a main trader;
- the ability to compare the statistics of different traders and choose the most suitable one to link your account with theirs;
- an option to monitor your trading results and to disconnect your account from the master account when the latter is not performing well.
4. What are the risks of social trading and copy trading?
In addition to the benefits, social trading also involves risks.
- The risks of social trading:
- traders who share their trading ideas and strategies can also make mistakes and their trading is not ideal; following their decisions can lead to both losses and gains;
- there can be many traders on social trading platforms. Each of them may have different perceptions of the situation and thus different points of view; in such circumstances, users may experience difficulties in deciding who is right and who is wrong, and in developing their own strategies;
- by using social trading platforms, user may become lazy and lose motivation to grow. He can refuse to think for himself and take responsibility for his own actions; by trading using social trading platforms, the user may lose their analytical skills instead of developing them.
- The risks of copy trading:
- Signal transmitters do not always provide profitable and winning signals; it can happen that the main account loses money instead of winning. Because of this, the user who linked his account to another account also loses money and earns nothing;
- relying on signal transmitters can also hinder the user’s development as a trading professional.
5. Where can I do social trading?
Users can access a wide selection of trading platforms including Binance, Bitfinex, Bitmex, Bittrex and many more. One of the most prominent and user-friendly platforms for clients is Bitget, the fastest growing crypto derivatives trading platform in the world. Bitget offers its users interesting products such as Grid Trading and One-Click Copy Trade. The first is a channel edge trading tool when prices move sideways. This is a useful tool for automatic trading. The second is a copy trading solution when the user links his account to the main trading account (the one that gives signals) and makes money from profitable trades made on it.
6. What should I pay attention to when it comes to social trading?
When a user starts social trading, he has to consider certain factors that will influence his trading results and ultimately the financial result. Without a doubt, the most important decision to make when trading on social trading platforms is to choose traders to follow and listen to their decisions. A successful and reliable trader is someone who:
- shows relatively stable and fruitful profits over the long term;
- trade on a stable system with well-defined rules for setting stop-loss and take-profit levels;
- actively discusses their strategies and trades with other traders; he does not ignore requests from his colleagues and is always ready to share his own ideas and answer any questions. Such a trader tends to maintain his own good reputation on a platform or forum. It is not the intention to provide false information.
The Bitget platform provides all the necessary information about traders and any investor can easily find out the trading history and overall profitability of traders.
7. Why is social trade so important to industry?
Social trading is a great tool to attract new industry participants, increase overall trading volume and grow the industry in general. Social trading is a way to get the general public interested in crypto trading and markets. As for master traders, they can get paid for spreading their signals while allowing their followers to profit and grow.
Social trading is a great way for beginners to learn about the cryptocurrency industry, improve their skills and move into independent trading. Moreover, it is very important that social trading attract new investment in the industry and boost the crypto market.
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