You may think that social trading is only for elites and those with long experience in trading. But if you will understand what social trading implies, you will know that beginners can take the most advantage of it.
Traditionally, this trading type allows newbie traders to copy the trading strategy of those who are experienced in the field. You can also copy their signals and utilize them in your own trades. Therefore, if you think of social trading, it is like a platform where traders meet to talk about trading strategies, ideas, and tips. On top of all these advantages, brokers having social trading platforms are enjoying an increase in first-time deposits, user activity, and even user retention. This makes social trading beneficial for both traders and brokers.
The Evolution of Social Trading
Long before, people were doing social trading through emails if they wanted to follow the trading strategy of an experienced trader. But nowadays, social trading is done much easier through several tools which are specifically made to make social trading easier and more accessible. Let’s take a look as to why social trading had to change into something easier to handle and much better.
Emails Are Slow
Emails are still being used nowadays to send and receive information. However, the process is too slow for the fast pace trading world. For instance, in the stock market, the data changes from time to time, and every second count. Emails, on the other hand, are too slow in promoting productivity in trading. In fact, other traders think that they are counterproductive.
Trading Chat Rooms
Because changes in the market are constant, people start to feel that they need a faster way of communication. Eventually, private chat rooms were created. They are also known as trading rooms. This is where traders talk about trading tips, exchanging ideas, and formulating strategies that can be used in future trades.
The Cons of Chat Rooms
It is true that private chat rooms provide instant communication, there are still flaws that need to be ironed. The flaws of private chat rooms are applied to both novice and expert traders.
Firstly, private chat rooms are not free. Traders who want to join the market need to pay a specific service to allow entry. Moreover, traders will have to spend time checking the chat rooms constantly so as not to miss important information. This will cost them hours and hours or even days.
Brokers Provide Help
The disadvantages of chat rooms are truly disappointing to traders. But when brokers started to intervene, they started to offer relevant tools that help trading to become easy and efficient especially to newbie traders.
Social Trading Platform
After all the changes encountered, finally, social trading was materialized as a social platform helping traders get relevant information. In social trading, all you need is a simple link containing the personal information and trading portfolio of the trader. With this, you can entirely view the trading history of the trader and all the information you need to decide if he is credible or not. You can learn what you wanted to learn just within some clicks.