Social trading is, perhaps, the easiest way to start trading with currencies, commodities and indices. It involves a relatively easy sign-up process and learning how to use the social trading platform you have chosen. Most of these platforms also allow traders to set up demo accounts with which to practice their strategies. Once you have gained the necessary confidence and experience to start making real trades, you can go ahead and open your cash account by depositing money as set by the trading platform. Here are a number of steps you will take when getting started with social trading:
Finding the Right Social Trading Platform
Today, there are quite a number of social trading platforms. The best place to start in your journey to identifying the best among them is visiting their websites. There, you will find testimonials from people who have used that platform, often telling you why they prefer it to others like it. But don’t just take their word for it.
Read other reviews on other independent websites to learn the challenges you are likely going to face if you decide to use a particular platform. For instance, an eToro review published on an independent site can give you insights you may not find reading websites affiliated to the social trading platform. The aim is to make the best possible decision from the most informed position.
After identifying the social trading platform that you think will best serve your interests, the next step is the registration process. Most platforms will typically have an easy-to-fill form where you will input your personal information. With the sign-up comes a practice account you can use with virtual currency to get acquainted with the intricacies of trading without risking the capital you’ve set aside for this endeavour.
Finding the Ideal Trader to Mirror/Copy
The main principle behind social trading revolves around finding the right trader to copy. You should therefore take all the time you need to analyse a number of experienced traders. Take a closer look at their track record and see if they have proved to record reliable and consistent gains. You may find a trader with big gains but some big occasional losses. For a novice trader, copying such a trader may not be a good idea.
Prefer those traders with small but steady gains and a relatively low percentage of losses. Consider the number of followers these traders have, the strategy that seems to be working for them, how many positions they close and open and the durations of these positions, and their level of maximum leverage that they have placed. For automated platforms, copying these experienced traders is complete with a simple click of a button.
Employing Your Own Strategies
As you research more experienced traders to copy, you will start to come up with your own workable trading strategies. When you’ve gained considerable experience trading, don’t shy away from trying out your own strategies; you might surprise yourself with how well you do.
The key to social trading is to keep learning. From the start, train yourself in the art of analysing other people’s trades. In time, your own trading skills will be sharpened, making you an experienced trader whose trades other people can copy.