Social trading is a guided-trading experience, making it perfect for beginner traders.
What is social trading?
Social trading is essentially when beginner traders follow and copy the trades made by expert traders. This can be anything from a 'copy trade', where only a single trade is copied, to 'mirror trading', where the less experienced trader copies the exact trading activities of the more experienced trader.
However, social trading is not necessarily a good fit for every trader. Keep reading to learn the advantages and disadvantages of social trading, and see if it is right for you.
Pros of social trading
Because social trading is essentially copying the trades of a more experienced trader, you don’t need any prior knowledge of the fundamentals to start trading.
As the name implies, social trading is largely a social affair. This means you can interact with other traders just as much as it you interact with the markets. By talking to other traders, you can pool your collective knowledge and experience together. Platforms such as ZuluTrade and MyFXBook allow traders to connect with each other, and in turn, copy each other’s trades.
Because you are copying the trades of a more experienced trader, you don’t need to spend as much time observing the markets as a more traditional solo trader making their own trading decisions. With platforms such as ZuluTrade and MyFXBook, this process becomes even easier, as these platforms offer automated services that copy the trades of your chosen trader for you.
Cons of social trading
Experienced traders may have more knowledge of the market than beginner traders, but that does not mean that they necessarily make better trades. After all, they are subject to the same pitfalls of trading psychology that the rest of us are, such as greed and fear. Therefore, social trading is by no means a risk-free way to trade.
It can be difficult to pick a trader/find a trader that matches your goals. A more experienced trader might not necessarily have the same amount of capital, or long term plans that you have with regards to trading. It is still important to understand what your own goals and plans are when trading.
Social trading is relatively hands-free, but that lack of 'doing' means that you also lose out on valuable trading experience. As such, you are also less likely to understand market patterns and where the market will go in the future.
Where do I start?
Great, so you’ve decided that social trading is something that you want to try. The next step is to get started with a broker with social trading connections.
BlackBull Markets is partnered with both ZuluTrade and MyFXBook two of the most popular social trading platforms. As a result, it is extremely easy to set up an account.
ZuluTrade allows less experienced traders to follow established traders, or signal providers, who are ranked according to an internal ranking known as “ZuluRank”. This lets you choose the strongest traders to copy. This, combined with other features such as ZuluGuard, which allows you to stop copying the trades of a signal provider when the make a change in their trading strategy, and Margin-Call-O-Meter, which lets you see when your parameter settings might put your account at risk for a margin call, makes ZuluTrade one of the most innovative social trading platforms, and the reason we have chosen to partner with them.
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