Social Trading and Copy Trading are becoming more and more popular among forex traders.
Following in the footsteps of Mirror Trading, which is rife first.
Both types of platforms for sharing forex trading ideas, indexes, etc.
What is Social Trading and Copy Trading?
Social trading presents a new way of analyzing financial data
By providing a basis for comparing and copying other people’s trading techniques or strategies.
The idea behind Social Trading is that a trader can utilize the knowledge of other successful traders to make smart investment decisions.
For example, a trader can look at other traders’ portfolios.
Track their overall performance and get a better understanding of their trading strategies.
This trading method is increasingly popular with novice and experienced traders.
Novice traders can follow smart investors while advanced traders can improve their own trading strategies and expand their portfolios further.
Copy trading is copying transactions from other traders who are considered more skilled.
Thus allowing traders to make a profit just by copying other traders’ transactions.
TenkoFX provides an auto trade service, where you can copy transactions from selected traders on myfxbook, by following the steps outlined, as an investor trader or novice trader, it allows you to make a profit without buying and selling as well as your own analysis.
Social Trading Explained
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Social trading is a service that allows investors to follow trading strategies and copy trades of professional traders, or many traders know them as a signal provider.
Traders can find signal providers on a special page for social trading service providers.
Traders choose based on various criteria: trading period, best trading, profit factors and so on as a reference to determine whether the signal provider is worth to following or not.
The high-ranking signal provider is displayed first in the list.
As beginners, they can learn from experienced traders to determine the best provider.
This reduces the time to conduct market and analytical research before trading Forex.
Traders who don’t have time to participate in training or make investment decisions independently prefer to use social trading.
Social trading works using the principles of social networking.
Using a trading network platform traders share ideas, post strategies, chat, beginners can research and learn from more experienced traders.
Experienced traders can also benefit from social trading, which allows them to become trade leaders or trade leaders and get additional profit, by attracting even more customers.
Conditions for copying transactions can vary.
Usually, to connect to this service, you need to pay a fee.
There is a commission for profitable transactions.
Or maybe the trader pays a subscription fee for a certain period.
The benefits of social trading
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Some of the benefits gained by social trading
- Beginner or investors get profits no matter their trading skills.
- It is profitable for both parties, as a trader, you make a profit by providing signals, as an investor by copying successful trades.
- Beginner or investor don’t need to analyze the market and spend a lot of time monitoring the market.
- You can subscribe to several signal providers, so your risk is diversified.
Social Trading MetaTrader 4
MQL5 signals are from the developers of the MT4 trading platform.
Which allows you to follow the signals of successful traders and copy their transactions directly from the MetaTrader terminal.
Social trading mt4 work is that you choose and subscribe to signals and transactions are automatically copied to your account.
But to use this service you must be connected with MT4 or another solution using VPS services.
History of Social Trading
Initially, Social Trading appeared in the form of Copy Trading, as provided by ZuluTrade.
However, in its latest developments, the Social Trading platform is not always connected or provided by forex brokers.
An example is TradingView, where traders from all over the world can draw and share their trading ideas.
Also, SIRIX whose main function is trading software such as MetaTrader4, but has integrated Social Trading technology and can be adopted by some forex brokers.
Characteristics of Social Trading
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Social Trading has four characteristics
- Free of information flow between traders.
- Cooperation between traders, where everyone in the network can simply share information or jointly conduct research.
- Monetization, can be in collaboration with forex brokers or provide information services and premium tools for its members.
- Transparency, in the form of disclosure of information, so that each trader can judge for themselves the credibility of the Signal Provider that follows.
These characteristics make Social Trading important for today’s forex traders, both those who are experienced and beginners.
For beginners, in particular, listening to signals and analyzing more qualified traders can open their eyes and provide additional knowledge.
But social trading also has own disadvantage. The main disadvantage is the time gap between the receipt of information by the main trader and his follower.
This time difference not only makes the execution not always entirely synchronous but also allows for significant changes when the time difference takes place.
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Copy trade is a feature so that you can copy other traders’ transactions with profit-sharing schemes.
So if you become a copy trader, you not only learn how they trade but also how they make a profit day by day.
With this, you will get the profit as obtained by the trader you copied.
Using a copy trading service allows you to clone the steps of some of the top traders and then apply them to your own trading.
In addition, some of the advantages of being a copy trader are
- You can have a pretty big profit opportunity just by determining which top traders you can copy and adjust to the funds.
- If you are still in doubt, then look at the trading history, thereby increasing your confidence which one can really really fit and match your trading style.
- By becoming a copy trader you can maximize your trading without wasting time, you just follow the trader you choose and adjust the lot size and ratio you choose.
- For those of you traders who do not have much time to trade, now there is a trading copy that runs automatically.
Even though copy trading runs automatically, but still a copy trader has full control over their account.
So when at any time he wants to be separated from this copy trading, you can do it anytime manually.
The main problem in copy trader is when you choose the trader that you will copy.
Consistency is very important because actually consistency in doing something is really very difficult. Look for traders who have high consistency, not just those who can generate very high profits.
When the trader you copy starts to decline, don’t be afraid to cut loss at any time.
This is because traders are also humans who have bad performance timings before going up to their best performance.
The strategy used has an effect on each trading account.
Realize the ability of your investment funds that are not the same as the ability of investment funds that you copy.
As great as they are, they are still human beings who can be facing loss, before that all happens then you have to really follow the trading of the person you are copying, don’t just let go of your hand.
Social trading vs copy trading
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Social trading and copy trading are mutually beneficial services between trader investors and master traders.
Both of which are platforms that help novice traders make profits in forex trading and provide opportunities for master traders to develop their networks.
Social trading is a broader term and copy trading is part of social trading.
Because of this reason hence the means that copy trading can be considered a type of social trading.
In social trading, you don’t let other people manage your trade automatically.
But you can use information from other traders and base your decision on that information and you make the decision.
Copy trading is a form of social trading that is more strict than binds your account with another trader account.
It’s meaning that the trader’s account that you copy reflects what happens to your account if they buy you will automatically buy and vice versa.
Their profit is your profit and their loss is your loss.
But you can set the transaction ratio between you and the trader you are copying, and determine the range of size position lots you want to follow.
Social trading or Copy trading is the best?
Which is best between social trading or copy trading is up to you.
You choose what suits your capacity.
For beginners traders may choose to use social trading, the risk will be much higher, but they can learn better from mistakes that occur.
This is because social trading only provides information and you are in control of your account, if you read the information in the wrong way then the loss will occur.
If you choose copy trading, this is a simple way to do it, you just search and find a master trader and by clicking the copy button you will be directed to copy their trading account.
The advantage is that you don’t have to do an independent analysis, but you can’t learn how the trader you are copying makes a transaction.
The advantage of social trading, your insight will be much broader by receiving information from experienced traders, but you must learn independently because of trading decisions in your hands.
While copying trading, the advantage is that you don’t need to do anything, because you will automatically copy the transaction from the master trader you are subscribed to.
Which is the best between the two? Everything is good, and you determine the best based on your needs.
Social trading and copy trading are useful features in the forex and CFD business.
Both beginners and professional traders both benefit, with more and more customers, professional traders will increase their commission.
And for beginners, they can make investments while learning to trade with a demo account.
But to use social trading or copy trading services, you must check your broker whether or not you have this service.
Because not all broker offers this feature.