Is social trading a legitimate way to make money? If you’re new to trading, is it a good idea to get started with social trading, or would you be better off sticking to regular trading? Does social trading work at all, or is it a scam that you shouldn’t touch with a ten-foot pole?
Social trading is legit, and it does work. It’s a great way to learn how to trade by emulating the success of people who have made money trading for years. Even if you don’t have any experience, you can make money with social trading and customize your portfolio to your liking (ex: high risk).
Today, we’ll help you understand what social trading is and why it’s a great trading strategy, even for beginners. We’ll also clear up some common misunderstandings surrounding social trading and why it’s one of the best ways to trade. Let’s get into it.
IMPORTANT SIDENOTE: I surveyed 1500+ traders to understand how social trading impacted their trading outcomes. The results shocked my belief system! Read my latest article: ‘Exploring Social Trading: Community, Profit, and Collaboration’ for my in-depth findings through the data collected from this survey!
Table of Contents
What Is Social Trading?
Social trading is a trading method used by some beginners and even some experienced traders to make money in the stock market. It’s a well-known fact that most people who trade money in the stock or forex markets — especially in the crypto market — lose money. Most beginners won’t have the experience needed to make the right decisions as to which stocks, crypto assets, or currency pairs to buy.
Unfortunately, most people need to learn by experience. Hands-on learning is the traditional way to learn how to trade in any trading market, but that also means that most people have to lose money to make money in the long run. If you are a beginner, it can be challenging to make the right stock or forex market decisions.
Why Social Trading Is a Beginner’s Dream?
That is where social trading comes into the picture. Social trading allows you to emulate what other traders are doing. Instead of needing to make all of your trading decisions from scratch, you can base your choices on the trades that successful traders are making in real-time. On a social trading platform, you’ll be able to track just that. You can see when many of your favorite traders are buying a particular asset, for example.
When you see that, you can decide to buy that asset yourself. After all, if all of the successful traders are doing it, they probably expect it to go up in value. If they’re buying a currency pair, they probably think that’s the best move based on either news articles that just came out or based on various indicators.
With social trading, you can track a single trader who you admire or a bunch of traders in a bunch. Either way, you’re not starting from scratch. Instead, even if you have no experience, you’ll be able to make smart trading decisions. You’ll even be able to learn how to predict the market’s moves. It’s almost like having a mentor showing you what to do in real-time, except that you can have a few mentors at once.
Social trading is one of the only trading methods that allows you to earn money from the beginning, with no experience, while learning how to trade at the same time. You don’t have to face all the fear and doubt that most beginners face, as you can be secure in the knowledge you are copying and learning from the best.
Does Social Trading Work?
Social trading does work. The reason is simple: You can copy the success of successful traders without going through the regular trial and error process that most traders have to go through. It works because you won’t have to worry about your emotions guiding you when you trade. If you see that enough successful traders are making a trade, you can usually trade yourself confidently.
Social Trading vs. Copy Trading
Social trading works because, while it allows you to get started with no experience, it also allows you to learn on the go. It’s a little different than copy trading. With copy trading, you’re usually tying your account to a successful trader’s trades so that you automatically place the trades they place in real-time, with as little delay as possible.
However, while copy trading is also great for being successful at trading even without a lot of experience, it doesn’t give you the same opportunity to learn. Since your trades are automatic, you probably won’t be looking at your account all the time. The hands-off approach of copy trading makes it so popular among many beginner traders, especially those who have busy lives.
However, social trading doesn’t necessarily mean you’re automatically tying your trades to a successful trader’s trades. You can also copy them yourself, manually, by placing the trades yourself. Social trading platforms are built like a social media network in that you can follow many people and copy what they’re doing. That gives you a better opportunity to learn on the go, although it’s also better for people who have more time to learn.
Copy trading is a type of social trading. Some people use the two terms interchangeably, so it can be hard to know whether you’re referring to automatic trading or not. However, usually, social trading is a broader term that encompasses copy trading, while copy trading, more often than not, refers to automatic copy trading.
Is Social Trading Legal?
Social trading is legal. However, nothing we say on this blog constitutes legal advice. You must always take responsibility for figuring out what the laws are in your own country (especially since some countries might have restrictions on forex or crypto trading in general). However, social trading is legit, and it’s a great way for beginners to make money.
Can Beginners Make Money With Social Trading?
The answer to that question is a resounding yes. While beginners often struggle to make money trading, whether they’re trading stocks or forex, social trading doesn’t present the same problems.
Social trading allows beginners of all trading experience levels to make money with trading, even if they’ve never traded in their life. I recommend beginners do social trading and copy trading, as it allows them to learn on the go and make money even with little time.
What Are the Risks of Social Trading?
All trading carries some level of risk, and social trading is no different. The risk with social trading mainly involves ensuring you choose the right traders to emulate. Choose a trader who has been making money every year, and you’ll be less likely to lose money yourself. Of course, that doesn’t remove the risk of trading altogether, as the stock and forex markets sometimes act erratically in ways nobody — not even experienced traders — can predict.
Nevertheless, I’d say that social trading makes trading a less risky investment for beginners. You don’t have to invest more than you are comfortable investing. I always recommend diversifying your investments and not putting all of your money in social trading. Or, diversify your investments by following different successful traders or doing some forex and some crypto.
It’s important to have a good social trading strategy. This YouTube video will help you create your strategy:
Author’s Recommendations: Top Trading and Investment Resources To Consider
Before concluding this article, I wanted to share few trading and investment resources that I have vetted, with the help of 50+ consistently profitable traders, for you. I am confident that you will greatly benefit in your trading journey by considering one or more of these resources.
- Roadmap to Becoming a Consistently Profitable Trader: I surveyed 5000+ traders (and interviewed 50+ profitable traders) to create the best possible step by step trading guide for you. Read my article: ‘7 Proven Steps To Profitable Trading’ to learn about my findings from surveying 5000+ traders, and to learn how these learnings can be leveraged to your advantage.
- Best Broker For Trading Success: I reviewed 15+ brokers and discussed my findings with 50+ consistently profitable traders. Post all that assessment, the best all round broker that our collective minds picked was M1 Finance. If you are looking to open a brokerage account, choose M1 Finance. You just cannot go wrong with it! Click Here To Sign Up for M1 Finance Today!
- Best Trading Courses You Can Take For Free (or at extremely low cost): I reviewed 30+ trading courses to recommend you the best resource, and found Trading Strategies in Emerging Markets Specialization on Coursera to beat every other course on the market. Plus, if you complete this course within 7 days, it will cost you nothing and will be absolutely free! Click Here To Sign Up Today! (If you don’t find this course valuable, you can cancel anytime within the 7 days trial period and pay nothing.)
- Best Passive Investment Platform For Exponential (Potentially) Returns: By enabling passive investments into a Bitcoin ETF, Acorns gives you the best opportunity to make exponential returns on your passive investments. Plus, Acorns is currently offering a $15 bonus for simply singing up to their platform – so that is one opportunity you don’t want to miss! (assuming you are interested in this platform). Click Here To Get $15 Bonus By Signing Up For Acorns Today! (It will take you less than 5 mins to sign up, and it is totally worth it.)
Conclusion
Social trading is a great way to make money as a newbie to trading, as it allows you to learn on the go and get hands-on experience. You are less likely to make serious social trading mistakes, and you can emulate the success of traders who have been in the game for years and know what they’re doing.
BEFORE YOU GO: Don’t forget to check out my latest article – ‘Exploring Social Trading: Community, Profit, and Collaboration’. I surveyed 1500+ traders to identify the impact social trading can have on your trading performance, and shared all my findings in this article. No matter where you are in your trading journey today, I am confident that you will find this article helpful!
Affiliate Disclosure: We participate in several affiliate programs and may be compensated if you make a purchase using our referral link, at no additional cost to you. You can, however, trust the integrity of our recommendation. Affiliate programs exist even for products that we are not recommending. We only choose to recommend you the products that we actually believe in.
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