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All You Need to Know About Social Trading in Australia

Written by Contributor, on 28th Dec 2021. Edited on 2nd Jan 2022 Posted in General

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What is Social Trading?

Social trading is a way for traders to share their ideas and knowledge to make better trades consistently. It also allows them to keep up with trends, which can be difficult if you are constantly monitoring the markets yourself.

Social trading involves individuals who trade stocks or forex, sharing their trades via eToro, Plutus or BTC Trader sites.

Advantages of Social Trading

There are several advantages of social trading, which include:

• The ability to mimic the actions of a profitable trader while avoiding the risks associated with trading yourself.

• Having a support network to assist you in times of uncertainty or difficulties. This makes it easier to make decisions and follow through on them.

• It is being able to use the knowledge from thousands of traders worldwide, all at once. This kind of insight can be invaluable when making difficult trading decisions.

For social trading to work effectively, you need to allow other people into your investment decisions. You also need to manage their access correctly; otherwise, they may cause havoc within your portfolio.

Despite these challenges, many investors have found social trading an effective way of improving their returns over time.

How Is It Done?

Social trading is done via a website or app. You can usually see several different traders all at once and choose whose views you want to follow. You can then place trades as they do, as per your trading strategy, and hope that their success will be yours as well. It is important not to copy each trade blindly; there may be reasons why you would want to buy or sell based on your research. This system works better for those who use longer-term investing strategies.

It can also help you keep up with trends or invest in something new before it begins to climb in price. This kind of thing has helped investors make profits when they might not have been able to do this alone.

What Are The Disadvantages?

• Social trading sites are still finding their feet in Australia. Many social trading websites are still very new here, so, unfortunately, users may try and scam others. Therefore, while some people feel it is an excellent way of sharing ideas and making money, there needs to be more regulation and oversight before we can trust them completely.

• Someone can see your trades and copy them without your permission.

• The other thing to remember is that people are more likely to follow those with good results. If your chosen trader loses money, you will lose money too.

While there are some ways to choose people on social trading sites with more consistent success, it's wise to remember that this is not a foolproof way of doing things. You will still have to do your research into the investments that are being made.

How To Choose A Social Trading Site?

Like all other platforms in Australia, regulation is paramount when choosing which platform you want to use for social trading. It isn't easy to know who has done their due diligence and who hasn't, so it helps if an Australian regulator has given them the stamp of approval.

Some important factors include:

• Policy settings – how do they decide whether someone can trade or not?

• The number of traders already using the platform. This makes sense because more people on an online forex social trading platform will likely provide better signals for forex AU traders who want to follow their trades. Finally, consider whether or not they offer educational materials to learn how to trade forex yourself.

Let's conclude

Social trading may be risky if it's done incorrectly; however, when used with forex knowledge and foresight, it can be an advantageous experience. While risks are involved, this kind of investment has worked well for thousands of Australian forex traders. You just need to choose your platform wisely and be careful about who you decide to follow.

 

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