Social trading has been one of the most important developments in the securities arena in recent times, especially for those new to the securities markets. Maybe you’ve heard of social trading or its distant cousin, copy trading. The latter is a kind of sub-set of the former but copy traders are more locked into a rigid way of doing things.
That’s the main difference between what most people call social trading and copy trading. Those who take part in social trading websites, forums, chat rooms, and formal clubs are more open to using and adapting the ideas and expertise of others. When you operate as a copy trader, you merely do the exact same thing as the person you’re following, which allows little room for creativity and adaptation.
In social trading forums, many of which are included within brokerage websites, people gather to discuss all sorts of strategies. The main benefit for newcomers is the chance to learn from experts, test out some of the techniques people talk about, and even join with large groups of traders in an attempt to influence the price of a particular security with mass buying or selling. What types of people are best suited for social trading? Here’s a short overview of ways that you can tell whether this new form of buying and selling securities is suitable for you.
You Like to Learn New Techniques
If you tend to be an open-minded type who enjoys listening and learning from others, social trading might be a good fit for you. Indeed, if you want to get involved with copy trading as a first step, it’s entirely possible to duplicate an expert’s purchases and portfolio additions. Copying implies buying and selling the same security at the same time, not necessarily in the same quantities. Many social trading enthusiasts being as copy traders. After a few weeks or months of copying, they develop a desire to learn a few new ways of doing things. From there, they usually venture into one of the many social trading chat rooms or other such spaces.
Chatting and Online Discussions are Part of Your Skill Set
If you already take part in various topic discussion groups on social media sites, taking part in social trade groups will come naturally. If the give and take of online conversations is new to you, chances are you’ll discover a fresh way of interacting with other people who have a common interest.
You’re Willing to Make Corrections
When a new strategy doesn’t work as planned, are you capable of changing course? If so, you’re a good candidate of social trading. That’s because a lot of what takes place in the forums related to theories and experimental techniques. You try a few new methods, keep the ones that work, and reject the ones that don’t.
You Aren’t Devoted to a Particular Style or Theory
If you’re strictly devoted to a certain theory or style of investing, then social trading might still be able to help you connect with others who share those beliefs. But in general, the social trading groups tend to be open to all sorts of concepts, ideas, and approaches.
Making a Profit is Your Overall Goal
In many forums where hundreds of people are discussing their favorite strategies, you’ll typically discover that there’s a common theme, namely the willingness to try anything that’s profitable. In a way, this is capitalism at work, an interactive meeting of varied systems that have one goal, which is to make money.
Disciplined, Unemotional Decisions Suit Your Personality
In the trading universe, emotional decision-making has a very bad reputation. When human emotion gets involved in issues of profit and loss, the results are almost invariably negative. If you want to adapt to the social trading niche, it’s helpful to leave emotion-based techniques behind. People want to learn from others, but are nearly always in search of objective, level-headed ways of choosing securities that can improve one’s financial position.
You Know How to Ask Questions When in Doubt
It’s essential to be able to ask questions when you hear something you don’t understand. This helpful skill is all-important when your capital is at stake. When in forums, never hesitate to ask someone the meaning of a term or concept if you don’t understand it. How you combine those two technical indicators and what dollar cost averaging means are just two examples of the kinds of questions you should always feel free to ask. The whole point of a discussion forum is openness, exchange, and dialogue. Never be fearful about making statements or asking questions of others.