Trading used to be a solitary game. Before the introduction of social trading, the only thing you could do was analyze charts, open positions, and hope you weren’t the only one making specific moves like buying a dip.
Then, brokers introduced social trading platforms, allowing traders to leverage what is known as the Social Edge.
Traders of all levels, from beginners to professionals, can harness and benefit from The Social Edge. Use this exceptional advantage to learn from experts, share ideas with like-minded people, and even copy the most profitable today. The following tips will help you get the most from the social edge:
- Follow the Right People, Not the Loudest
While on a social platform buzzing with opinions, hot takes, and recommendations from countless traders, you might be drawn to the loudest and most active individuals. That is a risky move because people who post frequently don’t always make money. Moreover, some of the loudest individuals utilize social trading sites, such as those accessible via AvaTrade’s trading platforms, to disseminate hype-driven content.
Don’t listen to everyone you come across. Focus on opinions and recommendations from knowledgeable traders with a good track record. You can identify them easily by weeding out posers using several factors. First, review each individual’s trading history and narrow your focus to those with consistent positive returns. You should also consider each person’s trading style and risk-reward ratio.
- Ask, Engage, Learn
Even if your primary goal at the moment is following top performers on your chosen social trading platform, you should ask questions, engage with others, and learn constantly. Be sure to ask questions related to trading strategy, risk tolerance, and preferred assets before committing to any advice. These will protect you from blind risk and help you identify the best traders to follow and copy.
You should also engage with like-minded people. That is the best way to familiarize yourself with different strategies and get views from diverse traders. Active engagement will also enable you to identify micro-trends before they gain momentum. Finally, focus on learning, especially from mistakes made by others. Ask the most seasoned trader about their biggest mistakes and what they’d do differently now.
- Use the Copy Feature Wisely
Most of the brokers with social trading capabilities also support copy trading. In other words, they also enable their users to copy other traders’ positions in real-time. This is a crucial feature that allows you to earn while learning. The best part is that you don’t need extensive knowledge or experience to leverage copy trading. But to reap maximum benefits from this feature, you must pay attention to several key aspects.
Before copying any trader, conduct due diligence. Study every potential guru’s profile, past performance, and risk appetite. Consider following every trader for a few days and monitoring their reactions to the markets before copying their moves. Finally, if your chosen trading platform allows it, set your risk parameters and adjust tools like stop-loss orders to match your preferences.
Get the Most Out of the Social Edge Today
The social edge offered by outside platforms like AvaTrade is a conglomeration of multiple crucial factors, including a community and a classroom. With it, you can take your trading efforts to the next level when dealing with all sorts of assets, including cryptocurrencies. But just like any other tool at your disposal today, the value you get from social trading will depend on how well you leverage it.