Social trading is a lifeboat for beginner traders and a cheat sheet for the lazy. When there is no knowledge and experience, as well as the desire to learn and get bumps from your mistakes, the most interesting ideas come to mind. Social trading is one of them. How does it work and is it worth it to mess with copying bids? Binarium experts share their views.

What is social trading?

The essence of the strategy is simple to indecent. The trader does not bother with statistics, analysis, does not delve into the principles of indicators. He simply copies the actions of successful gurus. True, they copy everything in different ways. Someone blindly and thoughtlessly, not trusting one iota, others analyze data from trading platforms and only then make their own decisions. Usually they are not much different from the choice of “sharks” of trading, so young and inexperienced earn money without particularly delving into the intricacies of market mechanisms.

The copy strategy was discovered not only by beginners, but also by hasty traders. They never learned how to make money with minimal losses, did not want to understand the essence, take a training course, but still do not lose hope of getting rich in asset trading. Social trading seems to them a simple way to make a profit without any effort.

Statistics speak for themselves. 80% or more traders are connected to the social trading function. Almost everyone does not even try to develop their own strategy, but they want to get stable earnings as soon as possible. Copying deals for them is a simple way to follow the trend and make a profit among the best traders.

Social trading and copy trading: the pros and cons

Benefits of Social Trading

You can do nothing, not spend time on training and often be the winner – in this copy traders see the main advantage of the strategy, if you can call it that. It turns out that successful trading does not require special knowledge, practical skills, even a mathematical mindset is not necessary. To make money, just copy the actions of the trader aces.

Professionals know exactly what the mood of the market depends on, correctly respond to changes, make accurate forecasts. Beginners are lost in all this, so they prefer not to take risks, but to go on the beaten path straight to the goal.

Another fact matters. By copying the actions of senior colleagues, novice traders do not risk being captured by uncontrolled emotions at the beginning of the journey. That is, decisions do not suffer from excitement, impulsiveness, greed of the trader. They are not at all colored by emotions. A beginner just does what others do, sometimes even without understanding the essence of the strategy.

But there is another category of “tradingcopiers”. Social trading for them is a practical part of training. They decided not to waste time studying theory and working with a demo account. Their strategy is to learn from practice with the pros, analyze their actions and remember the best schemes.

About disadvantages of mirror trading

If everything was so rosy and safe, now all office workers would rush into the financial market to get rich without doing anything. Ups in life are not without falls. Copy trading is an example of what you have to pay for everything. You do not want to learn, think, take risks, copy thoughtlessly and automatically, so be prepared to suffer losses along with the “teachers”. In the end, they, too, are not immune to losses. Entrusting their choice, novice traders agree to the risk.

In addition, we must not forget about the main flaw of a seemingly flawless system. Temporary gap between orders. Short-term transactions are completed in fractions of a second. The copied order will still lag and this will leave an imprint on the result of the copy trader.

Another disadvantage is the lack of motivation to learn. By constantly copying, traders are degrading. They do not think about their own strategy, do not develop an effective scheme based on personal analysis, but simply copy other people’s experience. The basic training of such traders remains minimal, they do not develop and will never become professionals.

Social Trading Features

Despite the apparent absence of risks, copy traders should not rush into the pool with their heads and immediately start playing for real money. Learning, even if copying the experience of others, is better on a demo account with a simplified interface.

And now the main thing that excites the adherents of the strategy. How to understand that a pro trader and his bets can be copied? Just look at the history of transactions. Data is publicly available on the trading platform. If the trader has a deal ratio of 6:10 and higher, it is worth observing him and, possibly, choosing the role of a mentor.

And yet, do not forget that any strategy is associated with draw downs. Any even the most experienced and successful trader sometimes loses. Another thing is important – the ratio of profitable trades to failed ones.

How the transaction copying service works – about the pros

Each trader presents his requirements to the strategy. Transaction copying services form a list of suitable trading schemes based on the needs of the trader. The trader tracks the results, analyzes the indicators based on the statistics displayed. Data is available to him:

• about tools;

• unprofitable transactions;

• profitable transactions;

• indicators of maximum draw down;

• duration of transactions, etc.

Data analysis makes it easy to choose an effective strategy.

But in addition to technical aspects, the transaction copying service removes the emotional stress of a novice and inexperienced trader. The trader confidently enters the market, trades boldly and in pleasure.

Using the service is not related to the status of the terminal of each trader connecting to it. Its feature is control. A trader can change the course of events manually at any time, even if transactions are already open. Closing risky contracts is easy, but at such times you need to be aware of the level of responsibility. Trader adjustments violate the trading tactics of the “managing” trader, so the result does not always live up to expectations.

Cons of the service of copying deals

Find a service and connect to it to constantly make a profit? It won’t work out that way. The financial market is unstable. Without taking into account the dynamics of events, it is difficult to control the situation even when doing copying. Relying only on the “managing” trader is reckless.

No one will guarantee that at some point he will do everything right and not lose money. Mindlessly copying is the direct path to the debt hole. That’s right – to observe and adopt. Any decision of the guru must be passed through his own filter of analysis, albeit imperfect and even rude, but still.

Do the pros know that their deals are copied? Rarely. Therefore, they are not worried about the “followers,” but are occupied exclusively with their own manipulations, accounts and contracts. This means that the “manager” is not responsible to the copy-traders. The actions of traders are a personal choice.

And yet, losing trades on the pros account can give a barely noticeable draw down, while the copytrader account will not survive and will go into oblivion. This also needs to be remembered.

Conclusion

The service of copying transactions, unlike the service of PAMM accounts, is the trader’s responsibility. The trader does not trust the money to the account manager, and he chooses who will follow what to copy and when. Freedom of action and choice guarantee complete control over the situation and do not relieve responsibility for the consequences of decisions.

TRADE OPTIONS

“General Risk Warning: Binary options and cryptocurrency trading carry a high level of risk and can result in the loss of all your funds.”

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