Social trading platforms might sound like an ultra-modern term, but this industry is far from a sapling in finance. By 2028, the social trading platform market could be worth $4 billion.
But before you start, it’s worth getting to know what social trading is and why it might be helpful if you plan to start trading online soon. Here is everything you need to know.
What Are Social Trading Platforms?
When you first start trading, there is a big learning curve. There is also a high probability of making mistakes! That’s how social trading platforms came into being, inspired by the more famous social media platforms like Twitter and Instagram.
Social trading platforms were a chance for novice and more experienced traders to network, chat, and share trading strategies.
That is a valuable resource for new traders who may not know how to do the proper research and analysis before choosing their first investment.
By speaking with seasoned traders, they can copy tried and tested methods and help avoid risky and costly trades from their lack of experience. See this page for more information.
How Do Social Trading Platforms Work?
What can you expect when using a social trading platform? Here are some of the main features:
Some social trading platforms allow you to link to your transactions for trades. So you can do everything within the platform rather than switching from one tool to another.
Experienced traders will post full details of a specific trading strategy on the platform. Subscribers can then choose to copy or mirror this strategy.
That happens automatically with the trade if the subscriber sets up the appropriate settings. The subscribed trader will make the same transaction as soon as the lead trader has executed their trade.
When you log in to a social trading platform, you’ll see a list of channel owners, similar to social media content creators. You can subscribe to these traders’ channels to follow their upcoming trades and tips.
Some traders who would prefer not to mirror strategies can use this as an information source alongside all their other financial research.
The Downsides of Social Trading
Most people with aspirations to trade often never start because of the high-risk nature of financial investing. So there is obvious appeal in using platforms that can fast track your learning and help you make suitable investments.
But there are downsides you’ll need to know before you sign up for social trading platforms. And that’s to do with risk exposure.
While these platforms can help you get started, they don’t eliminate the risk you take when making a financial investment. It’s important to know that before you start.
Social Trading Platforms: The Future?
It’s an exciting time for anyone who wants to get into trading but is worried about jumping into the deep end!
Social trading platforms are an excellent way to get to know the ins and outs and help you succeed in your trading future, whether as a hobby or a full-time career.
Head over to our finance section for our latest posts if you want to continue learning about trading strategies.