Can I Make Money from Social Trading?

One of the biggest questions running on the mind of beginner traders is, "Does social trading work? Will I be able to make a profit out of it? Is it the right trading method to help me get started?"

A big Yes to all the above questions. Here, in this guide, Mohsin Jameel, a man of many hats, a visionary digital entrepreneur, and one of the pillars of MOYO trading helps to set aside all your worries about social trading.

Over to Mohsin.

First things first,

What is Social Trading, and why the hype around it?

Social trading is one of the best-in-class investing opportunities available to newbie investors. Thanks to the rise of web 2.0, even inexperienced investors can strike it big in a trading network today.

As the name social implies, it’s sort of like a social network. But, instead of sharing selfies and foodfies, users of social trading networks share stories of successful trades with others. Other users can then copy the trades of winning traders and use it to build their own success stories.

To phrase it in a nutshell, social trading helps beginner traders imitate professional traders to replicate the success story.

Why is Social Trading considered as the Best Thing to Happen in the World of Trading?

Just like a regular social network, social trading platforms have a newsfeed, where you can see what other traders are doing. You can click on the profile of a trader for more information about them — their trades, experience, success ratio, and more.

While there is plenty of trading information available freely on social trading networks, some networks come with a pay-to-use model. These networks may charge a small fee to beginners to follow the trades of professional traders while paying an incentive to professional traders to divulge their secrets and rules.

One of the biggest benefits of social trading is that it lets you communicate freely with other traders. You can comment on their posts or message them in private to learn from them. To give an example, you notice that a particular trader carried out a specific move — such as opening or closing a deal. If you are confused about why this trader did this, you can message him/her in-person to know the reason behind the move.

However, keep in mind that not all traders on social trading platforms are sociable. Some may be willing to share information with you, while others may avoid you. Don’t get disheartened. It’s all part of the learning process.

Earlier, imitating the trades of professional traders was a time-consuming and complicated process. It involved scouring high and low on the internet locating successful trades to imitate. The sad part — by the time you find a trade to imitate, it fails to deliver the same results.

With social trading, it’s possible to find trades to copy with just a few clicks. It helps you transition from a novice to pro quickly and without much effort.

My Two Cents for Beginner Traders

With years of trading under my belt, here are a few tidbits that I would love to share with beginners.

Start by learning the theoretical basics of trading

It’s always advantageous to have a sound understanding of how digital trading works, terminologies, and various tools. This prevents you from feeling overwhelmed and lost. There are plenty of online tutorials and guides to help you grasp the basics. Shoot out an email to me if you need pointing to the right materials.

Don’t fall prey to the Analysis Paralysis

Very often, most beginner traders are too scared to make mistakes that they don’t get started. They end up over-analyzing the data in front of them that they fail to make the right move. In trading circles, we call this the "Analysis Paralysis." While you need to gain knowledge, at some point, you have to translate that knowledge into practice.

Social trading helps you overcome the analysis paralysis easily. It gives you confidence that you’re copying the trades of successful traders, thereby helping you get started with the first move.

Types of Social Trading

The two major strategies of social trading are:

• Copy Trading

As the name implies, it’s copying the trades of others exactly. You can open or close positions, just like your favourite traders. You can stop copy trading whenever you want. Some copy traders even automate their accounts to copy a certain number of trades of specific traders.

• Mirror Trading

Here, a newbie trader doesn’t copy the exact trades but follows the same strategy of experienced traders.

Now, coming to the crux of the topic,

Can I make money using Social Trading?

Yes, but there are certain caveats. While it’s easy to make money with social trading, you can also lose money if you don’t pay close attention to what you’re doing.

So, make sure to remain observant, analyze the trades of others, learn and adapt, figure out your trading style, and do not get cocky.

Understand that social trading is not Willy Wonka’s golden ticket to make heaps of money. But, when done right, it can easily help you transform from a newbie trader to a pro. Start by being active on various social trading platforms like MOYO trading. Follow a few great traders; learn from what they do.

As always, add diversity to your portfolio, analyse the trends of the market, and you’re sure to start making money from Social Trading in no time.

If you have any further questions or doubts, shoot me a line in the comments, and we’ll get the discussion going.

Cheers!

Mohsin Jameel is a British entrepreneur and a visionary leading several successful ventures and global financial sector for the past two decades.