An investor using the social trading method can observe the trades of other users on the same platform and copy their actions. It’s the same as having a group of expert traders doing homework for you. Investors choose which traders to “follow” based on criteria like the traders’ track records, their comfort levels with risk, and their preferred investment strategies.
Functions of a Social Trading Platform
Traders on a social trading platform typically use a piece of software that displays the market activity of their peers in real time. Looking at the actions and outcomes of other traders can help you improve your own trading performance. By following the transactions of successful traders and recreating them in your own account, you can “copy” or “mirror” them. While a mirror transaction is completed simultaneously with a copied trader’s, a copy trader just copies that trade. A common feature of social trading platforms is the execution of a “mirror trade” for the copying trader whenever the trader being copied makes a trade. Alternately, it notifies the trader doing the copying so that he or she may choose to replicate the trade or simply monitor it. The copied trader may rest assured that the social trading platform will keep track of all trades and properly recompense them. The amount of payment is subject to negotiation between the copied trader and the social network.
The Fees of Social Trading
Every social trading network is a for-profit venture. Before signing up for forex social trading, it’s a good idea to learn about the costs involved. You should look into the following primary costs:
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Making Deposits and Withdrawals
When making a deposit or withdrawal, many social trading sites may charge you a fee. The exact sum may change based on the method you use to pay.
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Commissions
It’s possible that your selected social trading platform will still impose a commission if you choose to replicate a trader. If they charge a fee, it is often a fraction of the total value of your trades. You might, for instance, have to pay 0.10% whenever your preferred trader makes a purchase or sale.
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Financing in One Day
You will incur additional costs if the copy trader you select maintains a leveraged CFD position overnight. Your investment in the copy trader’s performance will show up in your own social trading account.
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Fee for Copy Trading
There are no hidden costs associated with eToro’s Copy Trading service if using. Some websites, however, take a cut of your earnings. For any deal that results in a profit of more than €5, for instance, NAGA collects a commission of 5%.
In the end, you should anticipate to spend a proportional amount if the copy trader you select includes fees when making purchases and sales on your behalf.
Should You Use a Social Trading or Copy Trading Platform?
- A simple platform like MetaTrader 4 (MT4) will do if all you want to do is imitate the results of more experienced traders, so long as you can locate a signal source whose methodology is suitable for your needs. However, a more advanced platform may be necessary if you intend to develop as a trader and improve your abilities over time.
- Stay away from networks that are difficult to navigate or that restrict communication amongst users. In order to broaden your trading horizons, it is beneficial to have open lines of communication with more seasoned traders.
- Stay away from platforms that don’t offer a large variety of instruments from different asset classes, a best execution policy, or adequate indicators and drawing tools.
Dwight Cass
Expert in several areas of the financial sector, Dwight Cass is a consummate expert. He is a specialist on financial markets, corporate finance, alternative investments, fintech, and general business trends. Dwight has great experience managing challenging projects due to his a wealth of expertise. Dwight is well-known for his contributions as an author for the prestigious Traders Union website. In this role, he provides insightful commentary and analysis that traders may use to make better business decisions. Because of his extensive knowledge and experience in the financial markets, he is able to write in-depth and informative articles for traders and investors.
Also Read: https://www.dydepune.info/simplifying-binary-options-and-quotex-trading-with-intuitive-indicators/
