Social Trading on The Cryptocurrency Market: What Is It? What For? How To Use? Where To Find? And More:)
I consider Social Trading options as a top-instrument on the Cryptocurrency Market. Why? Everything is simple, let’s be honest, almost every trader has wished to “take an eye” into another user’s trading strategies, and here Social Trading comes as an awesome decision both for the digital market newbies and experienced users. How? The main idea is — If you consider yourself as a pro-trader — you can earn by “opening your trades” for newbies to copy your actions.
Let’s denote such a term as Social Trading, what is it?
According to Wikipedia Social trading is a form of investing that allows investors to observe the trading behavior of their peers and expert traders, and to follow their investment strategies using Copy Trading or Mirror Trading. It is a kind an alternative way of analyzing financial data by looking at what other traders are doing and comparing and copying their techniques and strategies.
The next questions arise: Copy Trading and Mirror Trading - What for and what is the difference between?
Сopy Trading is a kind of pre-set to automatically copy positions opened and managed by a selected investor(trader), in other words, just choose a more skilled user, copy their actions and multiply your profit.
Mirror Trading is a kind of automated algorithmic trading. This method allows traders selecting the tactics and to “mirror” the operations performed by the selected strategies in an automated way.
Difference:
Copy — Trader#1 places exactly the same trade as trader#2’s one single trade
VS
Mirror — Trader#1 automatically executes trader#2’s every single trade, i.e., trader #1 follows exactly trader#2’s trading activities.
Difference:
Copy — Trader#1 places exactly the same trade as trader#2’s one single trade
VS
Mirror — Trader#1 automatically executes trader#2’s every single trade, i.e., trader #1 follows exactly trader#2’s trading activities.
In what cases should we use it?
Now I’ll disclose the pros of exchanges with the Social Trading option, and 5 reasons to try them:
Now I’ll disclose the pros of exchanges with the Social Trading option, and 5 reasons to try them:
- Market analysis — opened trades of the market players is a great bonus while making your Buy&Sell future predictions;
- No third parties involved — traders can interact directly with each other;
- Duplicating the trades in order to repeat someone’s success and maximize the profit;
- Experience and knowledge — some operations “work their best” some “don’t”, but it is everything that comes to useful experience;Benefits for sharing the knowledge — while sharing your trades.
Is Social Trading profitable?
Being successful at the Digital Market means being able to read and understand charts, online analytics, and market trends. If you have the needed knowledge you won’t have problems choosing the correct trader (his strategy) to follow, if you are “just came into the market” person — study all the trades you do and it will pay you back, I promise🤓.
I am a “long-time in the market” user, how Copy/Mirror trading can be useful for me?
You can offer and provide your personal trading services to monetize your skills and get paid for your experience.
Users opinion:
According to my research on Quora (an American question-and-answer website) regarding this topic, many people can earn pretty well, while others reaction is a kind of the next answer (click to see the full topic)
“It can work. Social trading requires little knowledge about financial markets — all you have to know is how to assess the investor’s performance and profile, to determine whether you should or not follow him/her. However, this is HARD! There are probably good traders to copy in all these platforms, but it takes some time and skills to find them. Most of them are beginners with bad bankroll management skills and high-risk profiles. You should be careful when choosing traders to copy. Just as in any other investment, you won’t become rich overnight. If you are able to assess and find the best traders to copy, you should expect to make a good profit, but you should also consider the risk involved.”
As I previously said it’s important to choose “who to follow”, due to such opinions (Click to see the full topic)
“I have been copy-trading for the past 5 years. I’ve had good and bad years. I’ve had more success over the past couple of years as the copy trading software and platforms have become more advanced. Successfully copy trading requires copying the right people who use low-risk trading strategies. My failures in copy trading have come from copying people who risk too much capital per trade and use high amounts of leverage. Thankfully the copy trading tools are better now and allow you to search and filter people based on their trading strategy and risk level. Most copy trading platforms let you open a virtual or practice account. This is the best way to see if copy trading actually works. Just be careful the virtual account charges the same fees so you can get an accurate overview of the profitability.”
So, to use it or not is your personal decision, but knowing this information is worth it!