Trading in the Forex market can help you make money. It is an investment opportunity that may build your wealth with time. However, it requires you to have time and learn to follow the market trends. Those who have been successful in this trading market have taken years and a lot of effort in studying market movements. They are always digging deeper to understand the economic factors that influence the price movements of currencies. Social Trading has changed the traditional Forex trading into an interaction platform where traders share information and copy strategies of others.
Uphill Battles in Forex Trades
When you want to invest in Forex, you need to come up with a strategy. While this kind of investment can make you huge returns, it also presents enormous risks. You have heard of people who have lost nearly millions of dollars in just a span of minutes or hours because they did something wrong in their Forex trading strategy or the unexpected happened.
Sometimes, the Forex market can experience troubles where there are large spikes and dips in the value of the currencies. Due to the potential risks involved in foreign exchange trading markets, inexperienced and newbie traders may find it difficult to make any gains.
It is believed that only about two percent of those who trade in the foreign exchange market are able to reap the benefits, and the rest end up losing. In order to reduce the risks and start earning from Forex trades, you may want to consider Social Trading.
Social Trading Applies the Concept of Social Networking
Today, the Forex market has changed from being a platform for the wealthy, smart, and rich society, to being a trading arena where anyone can participate regardless of their capital input. You don’t have to put in too much money to trade in this market.
Likewise, you don’t need to be a seasoned trader or a professional in order to trade in foreign exchange. Social Trading has become a growing phenomenon allowing everyone interested in trading Forex to be able to earn money. The concept of Social Trading is built on social networking.
It is a Forex trading strategy that merges the traditional Forex trade with the success of social networking. When people interact in social media platforms, they share knowledge, ideas, and experiences. The same can happen with foreign exchange trading. It is possible for less experienced traders to enter the markets and succeed because they can copy the trades of experienced traders. Social Trading provides training wheels for the inexperienced traders— they can learn how to execute moves using safety nets.
How Social Trading works
In case, you have not heard about Social Trading, you may want to know what it is and how it works. With this kind of platform, it offers online networks, which allow retail traders to be able to share investment information and automatically copy the strategies that are being applied by top ranked traders.
Investors in the foreign exchange trades may think that it is just about copying. However, there is much more to it than that. The less experienced traders are able to get a pool of information that is crowd-sourced from the experienced investors. For example, a trader in New York has information about the America’s consumer stocks, which could benefit a trader who is in the Philippines.
In the same way, a trader in China will have information and specific knowledge on the Chinese Forex and stock market, which may be used by a trader who is in Germany. It is this sharing of information, which allows traders to diversify their trades. They can engage in low-risk trading by spreading their trades out in different currency pairs in different markets throughout the world. They don’t have to limit themselves to just the markets which they understand and have information about.
Why do traders share winning strategies through Social Trading?
People always want to feel like part of a community rather than faceless tanks. A cognitive neuroscientist and psychologist based in the UK, Dr. Lynda Shaw, said that people by their human nature are meant to operate or work in small communities. They feel empowered and validated when the winning traders share their strategies with other people. The desire for people to share trading strategies they use in the Forex market is built on the need for approval.
How can you Benefit from Social Trading?
In case, you are new to the foreign exchange market, Social Trading can be quite rewarding. You will link up with traders all over and enjoy the information provided by a larger community. The platform benefits everyone including the leaders and the copiers.
You don’t need to become a professional trader all by yourself. You can simply follow the talents of other traders. In regard to the leaders, the platform provides an opportunity for them to recruit followers and expound their revenue while also seeking approval, recognition, and validation.
In a nutshell, inexperienced investors or traders can select from a pool of winning traders and copy their strategies when they use Social Trading. Those new in this financial market can start earning money from the expertise of the professional traders. It’s is a win-win situation for both the copying trader and the leader. Different Forex trading platforms are introducing this kind of Forex trading strategy because it allows people to start gaining from their investment and reduces the risk of trading to some extent.