Social trading is often called copy trading and no big difference is made between these two terms. Even though the difference really is not big, there still are certain features these two concepts do not share. In this article, we will deal with similarities and differences between these two similar trading types.
What are social and copy trading
Social trading and copy trading are the terms which are usually used interchangeably. Those who use it rely on copying the tactics and strategies of other traders on the networks. It is mainly suitable for beginners, because they are not yet capable of analyzing the market, drawing conclusions and making smart trading decisions on their own. Inexperienced traders register on the social trading platform and copy the moves of the more experienced and reputable traders.
Similarities between social trading and copy trading
The first and the most obvious similarity is that both social and copy trading are based on certain level of interaction and on copying other people’s trades. Both concepts allow traders to find and follow their favorite binary gurus.
Then, both concepts are open and transparent for everyone. Every trader can see the success of others, which allows him to decide who to follow.
Both concepts have rankings of traders, from new ones to experienced ones. The general rule is that the new traders will follow the high-ranked ones, because they consider they can rely on their experience and decision-making.
Differences between social trading and copy trading
Despite these two concepts being similar, there still are some important differences between them. First, social trading is based more on manual settings and accepting or denying other traders’ decisions. With copy trading, the process is automated. You are required to choose the trader you want to copy, and the system will copy his decisions onto your trades. Most social trading platforms allow you to choose the control of loss. When the trader you are copying starts losing more money than you can afford, the process will automatically stop. Click here for more information about social trading and copy trading.
Automated copy trading versus manual social trading brings two more differences. First, as a consequence of different methods, social trading gives you much more control over your trades and the decisions you make. However, since copy trading is automated, it is much simpler than social trading.
It is important to point out that copy and social trading differ from automated trading systems, like Fintech LTD and similar robots, although the trades are performed automatically in both cases. With social and copy trading you rely on the decisions of other traders, while with automated trading systems you rely on the market conditions analyzed by an algorithm.
When you decide to choose social or copy trading platform, it is important to pick a reliable and licensed one, so you do not get scammed and have to file a lawsuit. Social and copy trading are relatively new, yet very successful and useful concepts. They are useful for many
kinds of people, especially those who enjoy learning from others. Which concept you will choose depends on you – your knowledge preferences and the trading skills you have achieved so far.