Social trading with Forex or binary options is the practice of copying the trades of other traders that you’ve found through an online social trading community. You can also use the trading community as your own personal support system and as a place to get ideas and discuss your own strategies. With social Forex trading, there are many different ways to communicate with other traders, including forums, profiles, blogs, signal services, brokers and specific platforms that provide copying abilities. All these forms of social communication help traders of all levels interact with each other and improve their trading strategies.
Social Forex trading offers a unique advantage for new or nervous traders – it allows them to follow others and to ‘hold hands’ with a more experienced trader during the trading process. Social trading also offers distinct advantages for more experienced traders, as it allows them to become trade leaders and to profit by recruiting more and more followers. Whether you’re a newbie or an expert, it’s a good idea to understand the different social offerings available so that you can find a comfortable place in this new and exciting world.
Here are a few of the more popular types of social trading platforms:
Signals or Tips
If you are just starting out in social trading, look for signals and tips to show you the way. These can come from simple sources such as a trader sentiment indicator posted on broker’s site or they can emanate from very sophisticated computer generated systems. You won’t encounter any sort of interaction from this type of social trading and you may not fully understand what you’re seeing because you can’t ask the trade leader. But, with signals or tips you will get the direct market position to follow if you so desire.
Copy trading is just that—it is the act of copying the trades of other traders. There are copy trading platforms that allow you to copy another trader and echo his success. You choose a trader from the leader board where every trade that person makes is posted and this is entered into your account. Restrictive controls monitor your account so you aren’t following someone blindly but the total responsibility is on you. Copying is an easy way to trade without the worry of making your own choices because all you have to do is select the trader that looks the best to you and copy it.
Forums and profiles
Forums and profiles are very important for you if you want to become a serious social trader and they can be the fun part of social trading. Forums allow you to talk to other traders while profiles help you get to know who they are. The best platforms will provide full profiles with biographical information, details about trading style as well as a tally of open and closed trades.
Most brokers offer forums for account holders and oftentimes, you can enter the discussion rooms of more public forums. A good forum will have hundreds if not thousands of active users and you can join the threads of your choice such as those dedicated to strategy, tools, tips and forecasts as well as many others.
Technically speaking, auto bot trading isn’t really social trading, as it eliminates the social aspect of the trade. Auto-bots are robots that are set to execute trades when a certain strategy or pattern is triggered. While social trading requires human traders to execute the trades, auto trading does not require human monitoring at all. The system generates a signal and then automatically executes it into your account. There are some pretty basic auto systems but there are also some fairly advanced versions that can interface with your computer and account seamlessly. The advantage of auto-bots is that you don’t have to worry about human error. The disadvantage, of course, is that you lose the human monitoring, so that trades are executed even when the lead trader (or programmer) may have wanted to override the suggestion.
When choosing a social trading platform, always look for one with strict account controls. These may include the amount you make on each trade, the total amount of loss allowed for each followed trader, the amount of time you follow the trader and which assets you will follow. As with any platform, the amount of control will vary from broker to broker and platform to platform but the more controls available, the better you will be able to manage your money and this is the most important aspect of trading for both beginners and experienced traders.