Imagine for a second what it would be like to have someone like Warren Buffett take control of your money and start trading the same way that he does. Chances are you be really happy with the results. Most people would be and in fact this is precisely what most people hope they are going to get themselves into when they start investing. They want essentially for someone else to tell them what to do or to show them how to find the perfect profit. Social trading is about as close as someone is going to get. The entire purpose of social trading is simply a way for those people who are brand-new to trading to look at the financial success that other people have gained and, essentially copy those which they think are reliable.
How Social Trading Works
So how does social trading work? Well it simply starts out by choosing a professional trader who has an impressive track record, clicking on their profile, and watching the trades you make mirror those of the financial expert you have selected in real time. Using social trading means you can literally attach your account to that of someone else who is considered a financial expert. At any time you can choose to stop copying the trades they have executed or you can switch to a different trader. With social trading you get the flexibility to stop your selection at any time and to latch on to the account moves of another expert.
Why would you invest in social trading? Well, the biggest reason is simply the fact that people do not want to do the work themselves. Not everybody has the time to become a full-time trading success story and those people don’t want to spend sleepless nights tracking the financial trends and trying to gain as many profits as they can. Instead it is easier to rely upon social trading so you don’t have to master your own finances to be successful. You also get the flexibility of choosing who manages your portfolio. You can compare different traders based on their past success stories and switch to a different financial expert at any time.
Naturally the downside to this is the fact that you are doing the work. There is a great deal of pride to be had in becoming a successful trader but you cannot consider yourself a successful trader when the only thing is you are relying upon is the expertise and skill of someone else. If you choose to look at this as a steppingstone it might provide you with a great place to start especially for people who have limited capital to move at the beginning. If you have limited capital with which to work you might benefit financially from following the expert moves of someone else until you have more capital with which to play. Another downside is that’s the person you are following might not make a perfect run of investments. You are hoping that based on past gains they know what they are doing. Understand though that just because somebody has been successful in the past does not mean that they actually know what they are doing or that they will be successful in the future. In some cases they may have earned a lucky break time and time again which leads you to incorrectly believe they have studied the ratios and know what they are doing. Of course you do have the freedom to change financial experts at any given time but in some cases you might have suffered a loss before you realize it is time to change.
Picking a Social Forex Broker
When you start using social trading, you have to first decide upon who will get the honor of working with your money and executing trades on your behalf. This is where you pick your social broker based on their past successes and their current skills. Pros and cons to a social broker are just about even. And in most cases picking your social Forex broker is actually the biggest decider and whether you will be successful or not. When you start out picking your particular social broker you are the one who has to do the homework. Yes, the purpose of having the social broker is so you don’t have to stress about which assets to trade at which time and so that you can have a financial expert to do everything for you, but the initial selection has to be done all on your own. You might choose somebody based on their previous record, based on their profits, their ratios, how long they have been successful in the industry, or perhaps because of their particular expertise. Some people involved in social trading might offer something similar to a resume which you can view so that you can sleep soundly knowing that the individual you have selected will work wonders for your finances. Of course no matter who you select understand that at any time if there are losses you really have no one to blame but yourself. Blaming the broker will not get you that money back. Hopefully you use this though as a learning opportunity so you can get your bearings, monitor what other people are trading and when, and move forward with your own portfolio eventually.