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Why Social Trading Can Lower Your Level of Trading Risk

No matter where you turn to and no matter who you ask about trading, there will be someone that tells you that it is a huge risk. Of course, this is true and with forex trading, there’s always a good chance that you can lose money (sometimes more than your original stake). However, it is this high-risk-high reward nature that attracts most investors to trading, with people willing to take on the odds. As any successful trader will tell you, the key to winning in the forex markets is limiting your exposure to risks. One way of doing this is through social forex. Here’s what it is and how it can lower your exposure to risks (if used correctly).

What is Social Trading?

Social trading is a free platform- usually available through an ecn broker- that allows you access to the trades of others, providing a platform for thoughts and discussions on market movements. A social trading platform is somewhere that gives you access to the professionals and you can talk to people who would usually charge for their services. Think of it like Facebook and Twitter for traders. Social trading gives you the chance to…

Automatically Follow the Trades of Others

There are a number of beginners on social trading platforms and, because you can use the platform to see exactly what others are doing, some people take the opportunity to just copy the trades of their fellow traders in the hope of turning a quick buck. Yes, it is true that this is a possible function and, if you find an experienced investor it can be lucrative but, the risks far outweigh the rewards with this feature, so be wary.

If you simply copy the trades of other investors then you’re essentially giving them your money to trade with and, if they’re wrong, you’re going to suffer huge losses.

Create a Well-Rounded Profile

Because you can sync your social account with your platform, you can analyse your performance using charts, graphs, and technical analysis enabling access to each and every trade you place in detail, charting its process.

This will allow you to see your progress and look at why certain trades have been successful while others haven’t. Overall, this sort of chart analysis can help you become a better trader, showing you how to make better, more informed choices. Plus, if you’re still unsure, you can consult the thoughts of other traders.

Network and Make Friends

A social trading platform also allows you to create a portfolio of other investors who, over time, can become good friends. This constant contact with other traders will help strengthen your research methods and help you make better informed choices. By learning form them and picking up hints and tips that they give you, you’ll become more self-dependent. Just remember to take advice from people you’ve just met with a pinch of salt.

To conclude, social forex lowers your exposure to risk, helping you become a better trader. The world of forex is vast but, social forex gives you both the opportunity to improve your trades and make friends. Using it to lower your exposure to risk seems like a no brainer, as long as you don’t just copy the trades of others blindly.

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