What is social trading and how is it done?
In the world of cryptocurrencies, you can exchange information with social trading in addition to increasing your knowledge in this field. If you are an expert in this field, you can share your experiences with others or if you are a beginner, you can use this platform to learn. In this article, we are going to introduce you to the social trading environment, tell you about its advantages and disadvantages, and teach you how to earn through this great platform.
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How is social trading done?
Social trading allows traders to quickly access the financial markets to share their strategies with others and also to use the strategies of other successful traders. Beginner traders on this platform can copy other people’s trades. Some social trading platforms work in an integrated manner and allow users to select and follow a trader and automatically, if the selected trader executes a trade, the following trader will do the same. be done.
On the other hand, traders can use social trading to analyze and control their trades and improve their analyzes by receiving various signals and observing the behavior of other traders and the community of traders.
In Social Trading, you can communicate with other traders and get good profits by becoming a member of this network and following other people’s strategies or by providing signals yourself.
What is the difference between copy trading and social trading?
Cryptocurrency investors and especially newbies often confuse the two topics of copy trading and social trading. Of course, both of these methods are done by interacting with other traders and investors and then making decisions based on the opinions and data obtained. Although the similarity of the names of these two trading methods can be very misleading, there are fundamental differences between them that make each one unique.
This investment method has recently become very popular thanks to numerous and efficient social networks. For example, in Reddit forums or among a trader’s Twitter followers, people may start sharing their thoughts and then provide their analysis for others to use and gain.
social trading is a more comprehensive concept and also much more informal than copy trading in digital currency. In social trading, you don’t need to use special software or agree with other investors to share the profit. Many of those who trade using social trading in the world of digital currency, in fact, look for useful and first-hand information in various groups and social networks, and finally, based on this information, they decide to trade or not.
Advantages of social trading:
- Successful traders can earn profits by providing signals.
- Beginners can profit by copying trades.
- Ability to track the results of other people’s transactions in real time.
- An interactive space and the possibility of communicating with other traders and using their analyzes and forecasts
- Transparent presentation of information in such a way that it is not possible to hide losses.
- A quick and easy way to learn and grow quickly in the field of trading.
In contrast to the advantages mentioned above, social trading also has disadvantages.
Disadvantages of social trading:
- A false sense of security is one of the dangers of social trading. Trading is not easy and just trusting an experienced trader is not enough to forget the risks in the market.
- Not all aspects of transactions are displayed on the platform. For example, if you want to copy an experienced trader, you don’t always know how much capital he is putting at risk. So you won’t understand his real risk.
- False trust in traders is another risk in this trading method. Let’s say you made a lot of profit without much effort, just by copying someone else’s trades. How likely are you to increase the capital you invest in the market in the hope of making more profit? This risk can put all your assets at risk.
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