Social trading is a single space, enabling experienced traders broadcast signals of the trading system and receive a commission, but beginners and passive investors - benefit from their experience.
What a beginner would not want to start trading on the financial market with the profits? What is a passive investor does not want with minimal time to maximize your income? What a successful trader is not interested in increasing their profits, while maintaining the original level of capital? The needs of financial market participants in solving their problems eventually caused the appearance of a completely new type of trade - social trading.
The creators of the first platform for social trading eToro found it necessary to develop a new product, when we saw a continuing trend and the market demand for professional traders of knowledge on the part of newcomers, as well as the desire to obtain information about the trade practices in social networks, professional communities, forums.
Social trading: concept and bases
Many traders identify social trading with a copy of transactions that are not entirely correct. Social Trading - is a broader concept that includes all the tools of interaction between leaders (professional traders) and newcomers (novice traders, passive investors). These tools include a mirror trade connection and EUR PAMM-PAMM.
Mirror trading involves copying the trader deals with a given strategy, including all additional parameters (alignment of limit orders, positions and capacity, etc.), as well as the scale of transactions under the account of the client. Scaling is an extremely useful tool, as it allows the investor's account proportionally reduce the amount of the position and not take any further action for the allocation of capital.
PAMM investment involves the transfer of funds to the management of an experienced trader. However, the list of traders with whom you can work is limited to one broker. Euro PAMM allows you to analyze and work with the managers of the various brokers.
The advantages of social trading
Social trading allows you to meet virtually any need for a beginner in communication, advice, mentoring. For passive investor it will be useful for ease of use and minimization of non-commercial risks: a trader can continue to work with your broker, your own auto close open trades at any time, change the traders, for whom he wants to watch, to form any type of investment portfolio through a combination of different strategies different traders. In addition to these, the social trading has the following advantages for novices and passive investors:
It requires a minimum of knowledge about investing and analysis;
virtually eliminating time-consuming;
allows the trader experience, which you can select the parameters most suitable trader (type of trading, the yield / risk, subsidence, etc.);
It allows to intervene in the transaction;
It requires minimal additional cost: for small signal to the commission.
Trader-leader broadcast their signals on display allows to receive enough small commission from beginners. Moreover, brokers today offer many affiliate programs that will further increase the income of an experienced investor.
Disadvantages Social Trading
Some traders rightly suggests that social trading least disadvantages and risks. This is due to the flexibility of copying and following the system settings, as well as the variety of variations on risk diversification:
the human factor - the trader can copy trades of several traders with different trading systems that minimize the impact of the human factor. Most managers today uses algorithmic trading - this is the best solution for the foreign exchange market;
Brokerage Risk - the trader is not obliged to use the services of a broker leader, and may choose a mediator in its sole discretion;
Managing low-quality - when certain events trader at any time may waive control services at no additional cost.
Perhaps the main drawback is the indirect risk to remain a novice at such an interesting market for investment. Experts recommend that in the process of copying transactions is required to continue to self-study, not only theoretically, but also practically.
I upvoted You
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit