Social Trading on the Cryptocurrency Market: 5 Reasons to Try
Crypto social trading can be a complex topic for newcomers, but this post is designed to help you get started. Join us as we explore what Social Trading means, how it works, and why it’s worth your time.
Defining Social Trading
Social trading is simply defined as an investment method which involves watching how other traders (professional and casual) behave, before utilizing the same strategies through Copy or Mirror Trading. This can be a simple but effective way for beginners to learn how trading works while picking up some helpful strategies.
Essentially, crypto Social Trading is observing how other traders work and copying their techniques (though you may make small changes here or there to suit your own ends).
Copy Trading vs Mirror Trading
The next part of our Social Trading guide covers the difference between Copy Trading and Mirror Trading.
Copy Trading is based on automatically copying positions set up by a trader and taking action to achieve equal or better results. Basically, you simply find someone with a suitable level of expertise, copy their trade, and (hopefully) watch the profits build.
Mirror Trading, though, is an automated technique based on algorithms: traders can choose which operations they want to mimic and set them to run automatically. It’s similar to Copy Trading but on a larger scale, using algorithmic strategizing to mimic every buy or sell decision a specific trader makes.
When is Social Trading the best option?
There are multiple reasons to try exchanges which offer a crypto Social Trading feature, including:
Traders can communicate directly
There are no third parties involved, and traders are free to interact for a more sociable, informal experience.
Maximize potential profits
Social Trading enables you to repeat another trader’s positive results and boost your profits, with little work.
Make accurate data-driven predictions
Having access to market players’ opened trades helps you make more accurate predictions on upcoming market activities.
Learn from successful traders
Using Social Trading gives you an insight into how other traders behave, and may help you learn effective new strategies.
Can I make a profit from Social Trading?
Achieving success on the digital market demands that traders can analyze charts, make sense of complex analytics, and follow trends in the market accurately.
Social Trading officially demands little hands-on understanding of cryptocurrency markets, but you should still be able to recognize which traders offer the most value. You can’t dive into copying or mirroring the first traders you come across, unless you have unlimited capital. Take the time to choose the traders you plan to copy carefully, and remember that you’re highly unlikely to make a fortune overnight.
Another issue to think about is copying traders who invest excessive capital into trades and utilize a lot of leverage. Stick to copying low-risk traders, and if you can, use a practice account to familiarize yourself with the process. This reduces your risk of losing real money as a beginner.
So, while you don’t need expertise to try Social Trading, having the necessary knowledge makes it easier to find the right traders making solid choices. Doing a little research before trying Social Trading can make a big difference, no matter how inexperienced you may be. The more traders you follow and the more Social Trading you try, the more likely you are to turn a profit.
Furthermore, if you’re a seasoned trader, you can help beginners take advantage of crypto Social Trading by sharing your expertise. You can monetize this to increase your trading-related revenue.
In short, Social Trading can help newcomers to cryptocurrency trading when they use it sensibly.