New and innovative ways of trading are on the rise, due to the popularity and accessibility of online trading. Many of them hype up your chances of getting rich quick – usually an empty promise. One of the recent trends is “social trading”. Social trading creates a trading community. Individuals build on each other’s success.
But is social trading a scam or a gold mine? Should you give it a go?
Let’s first define what social trading is.
What is social trading?
Social trading refers to when a group of traders share their live accounts in real time. It is a form of social media on which, instead of sharing life events, members share their trading decisions.
The novelty of social trading is that, with this info, you can trade simply by following a trading expert. You could forego all other indicators and trust the expert’s judgment.
Social trading platforms aggregate shared information, and allow you to make decisions accordingly. It’s totally intuitive – if there are others who are better informed than you, copying their trading decisions makes a lot of sense.
But even if it’s intuitive, are social trading platforms trying to take advantage of you?
Is social trading a scam?
Social trading is being picked up by traders around the world, many of whom have seen great success. If you do a quick search, you’ll find a plethora of testimonials that confirm social trading is not a scam.
However, just like any industry, there are those who use social trading as a cover to try trick you out of your money. The internet is rife with scams, but you can avoid them if you do the necessary research.
When choosing a social trading platform, make sure of the following:
- the parent company is authorized and regulated by local financial authorities
- the website does not promise too-good-to-be-true outcomes. Don’t expect to become an instant millionaire, and don’t trust anyone who guarantees it will happen
- check that their data is accurate. Once you’ve established that their indicators are correct, it is safer to trust their information going forward.
Is it a goldmine?
Social trading is not a scam, but is it a goldmine?
The answer is that it can be. If you carefully follow the best investors and make good choices with your investments, you can make a lot of money. Of course, it is always possible to lose money, as even the best investors make losses. It’s an unavoidable part of trading.
But even if you don’t make millions, you can still make enough to supplement your income. And there are other benefits to social trading:
Following expert traders helps you learn about the markets. By studying their trades, you can gain quick experience without the trial and error.
Social trading is also a lot of fun. As long as you’re not risking your house and home, you can get a lot of enjoyment out of sharing your trading ideas, making calculated bets, and discussing your results with your friends.
Worth a try
Social trading is not a scam, even though there are those out there who wish to take advantage. As long as you’re responsible, you can make a lot of money while having a fun learning experience.
Social trading is worth a try. Expert traders are offering their experience. Why not take advantage?
Image credit: CC by Jesse Nandra
