Can you make money with social trading? What is social trading anyway, and what is the difference between social trading and copy trading? Which one is better suited for you?
Social trading is profitable because it allows beginners to earn money without any experience while learning how to react to the market’s fluctuations in real-time. Many people are earning money with social trading, which allows you to watch what successful traders are doing and copy them.
In this article, you will learn more about social trading and how it can be profitable, even if you are just getting started with day trading. Let us 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
How Profitable Is Social Trading?
Social trading can be extremely profitable because you are relying on the knowledge of successful and experienced traders. You can execute good trades that earn you money without worrying as much about making wrong decisions or about not knowing whether to buy or sell a currency pair. Beginners can especially benefit from social trading, as they can watch what successful traders are doing and learn from them in the process.
There are a few ways of learning how to trade. One way is with trial and error, but this can cause you to lose a lot, or even all, of your initial investment.
Another way to learn how to trade is to take trading courses or read books on trading. You can even find courses online. You can learn how to use trading indicators to predict the future of a currency pair, but that will take a lot of time, and not everyone has the time for that.
Social trading is one of the best ways to learn, as you will learn from what real traders are doing in real-time. Watching successful traders and seeing how they react in real-time to dips in the markets can help you learn when it is a good time to buy and when it is a good time to sell. Social trading allows you to learn via hands-on experience.
How much money can you make with social trading? That depends on how much you put in.
The more money you put in, the more money you can make. You can start making money right away, but it is important to watch what only the successful traders are doing. Don’t pay attention to noise, or traders that seem to be making a lot of money but are in reality only earning because there is a bull market. Anyone can earn in a bull market.
Of course, social trading is not without its risks. All trading carries risk, even if you are a successful trader who has been earning double-digit returns per year for years. The market can unpredictably fluctuate at any time, and you can’t always predict it, even if you use indicators.
What Is Social Trading?
Social trading allows you to follow successful traders’ trades and emulate their actions. For example, you might watch trader X to see what he does and doesn’t do. When trader X sells a certain currency pair, you can do that as well, knowing that trader X has a lot of experience and likely knows what they are doing.
This type of trading is perfect for beginners because it allows you to learn how to trade while earning money at the same time.
But the harsh reality is that most beginners lose money when trading, even if they become successful later on. Going the usual route to becoming a successful trader usually involves a lot of trial and error and a lot of losses.
With social trading, however, you don’t have to go through all that trial and error, as you are relying on the analysis of a successful trader who has already gone through trial and error and knows when to buy a currency pair and sell it.
Social Trading vs. Regular Trading
The main difference between regular trading and social trading is:
With regular trading, you rely on your analysis to make trades.
You might decide that a currency pair is a good deal because of certain news updates, or you might use various indicators to help you determine the future of a currency pair or cryptocurrency.
However, with social trading, you are essentially relying on the analysis of others, which is why you don’t need any experience. You can choose to rely on the analysis of one favorite trader or watch several traders to make trading decisions based on what the majority of them are doing.
Social trading platforms let you watch what other traders are doing in real-time and copy their trades. It is almost like a social network, as you can follow other people and see what they are up to on social media. The same goes for social trading platforms.
Social Trading vs. Copy Trading
It is important to clear up some confusion about social trading and copy trading. All too often, beginners mistake them as being the same thing when there is, in reality, a crucial difference between the two.
You can almost say that copy trading is a form of social trading, which involves watching the trades of others and trading accordingly.
However, it does not necessarily mean that you will automatically copy their trades via an automated system, but you might watch their trades in real-time and execute them yourself, or you may decide not to copy certain trades.
For example, you might see that other traders are not doing what trader X is doing, so you rely on the majority’s opinion and don’t trade exactly like trader X, even though you usually copy his or her trades. You can make an exception in one instance, based on what other traders are doing or even based on your analysis if you are advanced enough.
However, copy trading usually refers to an automated system in which you automatically copy trader X’s trades in real-time. You don’t have to do anything, or even watch what trader X is doing because the platform will automatically execute the same trades that he or she makes in your account.
For example, with copy trading, if you decide to copy trader X and trader X sells the EUR/USD currency pair at a certain price point, your trading account will do the same for you automatically.
Social trading can include copy trading, but it is not limited to automatic trading processes.
So, which is better, social trading or copy trading? The answer depends on your needs. If you don’t have time to watch what traders are doing, as you are busy the entire day, you can choose copy trading, which will help you save time.
On the other hand, if you want a bit more independence, or you want to watch several traders so you can make trading decisions based on what they do, you can choose social trading platforms instead.
For more information on social trading and copy trading, watch this video:
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 can be profitable and is a great way for beginners to start making money while learning how to trade in real-time. There is nothing that beats hands-on experience.
Social trading is almost like having a mentor, except that you can have several mentors simultaneously. It is recommended that beginners get started with social trading even if they don’t have a lot to invest in and have no prior experience with trading forex or crypto. Once you are comfortable with the market, you can go at it alone or mentor another beginner.
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!
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