In this digital-oriented world where the whole globe is accommodated with digital assets such as cryptocurrencies, social trading is one of the most prominent developments in the financial industry from the past few years stimulated by the fintech revolution. Social trading has the potential to initiate inexperienced consumers into the world of digital assets as cryptocurrency is a complex topic for newcomers. Social trading is an investment method that involves the analysis of the behavior of other traders before using the same strategy through copy or mirror trading.
More and more people are investing in cryptocurrencies especially during the pandemic year and 29% of growth in customer trust is observed between 2017 and 2020. There would be no surprise in saying that the pandemic year has caused instability and widespread disruption into the globe’s numerous financial sectors and markets. One of the most prominent benefits obtained from social trading during the pandemic of COVID-19 is wide-range of individuals are noticing the fact that the expertise of other traders can be an incredible method to make money during a time of great market uncertainty. In fact, 15% of Americans now own some sort of cryptocurrency.
There are numerous reasons to try exchanges that offer the crypto social trading feature. Below are the top 5 reasons why you should try social trading on cryptocurrencies and digital assets.
Special features are incorporated by numerous social trading platforms such as eToro to synergize social trading and copy trading. Copy-trading allows traders to imitate other trader’s portfolios and actions in real-time. An investment is made for the copier at the same proportionate amount for every investment the copied trader makes. In such a way, people who would spend less time actively trading can let other traders work for them. Hence social trading helps beginner traders to become seasoned traders with a high rate of accuracy and efficiency.
Obviously handing over your money to someone else could be quite risky yet scary, which leads us to something called transparency.
Numerous people hand over their money to someone else whether it’s by opening a pension identity verification, using a broker, or depositing money in the financial sector. You are essentially permitting other people to utilize your money to make an investment on your behalf. All these examples have only one thing in common, and that is most of the time you are not aware of the fact that where your money is being invested.
Social trading platforms allow developing a transparent relationship among traders and permit you to continuously monitor risk assessment and money management. Trader profiles possessing all the significant information to assist potential copiers to come up with smart copy trading decisions. Social trading platforms provide a unique risk score on the basis of trading strategies and habits.
Assist You To Gain Exposure
No matter how experienced a trader you are, there is always room for improvement. You cannot possibly master every market. Few of them are experts in a certain geographical market, such as Europe and the United States, whereas others are specialized in certain asset classes, for example, cryptocurrencies, commodities, and stocks. Social trading initiates traders into markets they wouldn’t enter on their own.
Let us consider an example. In case someone desires to allot some of their funds to the Asian Market, they can do this by copying a trader who has expertise and is successful in a market instead of going into a complex process of mastering a new expert. Now let us consider one more example. Someone who is proficient in stock trading but would expand and diversify other asset classes. In this case, they could copy a crypto trader.
Permits You To Step Back
It is always mandatory to keep in mind that social trading is not always about deficiency of experience and time. There exist few traders who are quite expert in their skills and have spare time, but they might want a break from actively managing their portfolio. Ultimately, short-term trading styles for example day trading are highly in demand, requiring constant attention which is quite stressful. Traders can choose to copy others in that case. This way they could take a break from the swift-paced world and lifestyle while copy traders trade for them.
Communication Among Traders
Communication is the key to success. It is concluded from thorough research and deep analysis that communication among traders and investors within the framework of numerous copying systems is next to nothing because the focal thing here is to copy profitable transactions that increase your account balance. However, a strong communication channel can assist investors in an unexpected manner. Traders can exchange their opinions and strategies and gain immense profit and reshape the trading dimensions. There exist numerous platforms for example Dtrade that incorporate innovative communication and sharing mediums, permitting traders to watch live sessions and join the auto trade and revolution with certain traders’ lives.
Some More Pros of Social Trading
You are ignoring a really powerful tool if you are a broker and are not acquiring lists of benefits provided by social trading. Above are some prominent advantages traders and investors can acquire from social trading, but that’s not all.
Below are some more advantages of implementing social trading in your brokerage.
- Social trading assists brokers to boost their deposit and acquisition by providing novice traders who fear losing their money the notion of being able to copy from expert traders with a proven track record.
- Social trading helps traders to boost their trading activity. When an expert trader opens a position in the social trading community, all those traders who are copying him will open the exact same position at the exact same time virtually.
- Social trading enhances customer relationships.
- Social trading makes a novice trader more comfortable because the experience is less intimidating and more social.
- Social trading assists brokers to lower their attrition rate and boost retention in return by providing traders an FX community to which they can feel apart.
Social trading requires little hands-on understanding of the cryptocurrency market, but you should be smart enough to analyze and recognize which traders offer significant value. Chart analysis, acknowledgment of complex analytics, and following market trends accurately are required to achieve success in the digital market. Although social trading features are highly appealing, it is crucial to continuously monitor the current market trends and strategies.
You can assist newcomers by sharing your social trading expertise with them if you are a seasoned trader. Having mandatory knowledge makes it sufficient enough to find appropriate traders and make complex decisions. No matter how inexperienced you might be, thorough research and deep analysis before getting into social trading can make a major difference. All in all, social trading proves to be highly beneficial for beginners who have little or no knowledge of trading cryptocurrencies.