A+ R A-

Social media has already woven itself into the fabric of all types of human interaction in this digital age. Social media is now the go-to to place to connect with friends and family and to check up on people. Brands also use social media to maintain real-time connections with their followers, users, and customers. Social media is also the go-to source of news, information, and updates on things that interest you.

However, the fact that social media is mostly social has created the erroneous notion that social media and the serious business of trading/investing cannot mix. Traditional stock traders will scoff at the idea of getting stock picks, new or analysis over Facebook, Twitter, Instagram or other social media platforms. However, social media is also disrupting the world of trading and investments.

What is social trading

Social trading is a form of trading activity that happens on a platform where traders can see the trading and investment moves that successful investors are making. Social trading allows the interested trader to follow preferred successful traders and copy their trading moves in order to book the same results. In fact, some social trading platforms will allow you to copy and place the trades of successful traders automatically.

Of course, critics will point to the fact that social trading does not guarantee trading or investment success – and they are right. Social trading doesn’t necessarily mean you won't have some losses because the markets can turn against even the best of traders. However, social trading can significantly improve your odds of being on the winning side of the market.

Here's why social trading is becoming the new normal

1. Easier access to the market

The first advantage of social trading is that it provides potential investors with a shorter learning curve for easier access to the market. Once you learn the basics of investing, you don't need to waste valuable time leaning the nuances of technical or fundamental analysis. Social trading can let you jump ahead of the curve to begin placing trades that have a higher probability of success. Social trading also eliminates the beginner's fear or lack of confidence that might keep newbies out of the market.

2. Learn from 'real' successful traders

Anybody can lay claim to being an expert with the right kind of branding and web presence. Such self-styled experts are usually the ones offering people phony trading systems and secrets that are not worth the papers on which they are printed. Social trading can connect you to the real experts of the stock markets who have proven record of successful trades. You can see a history of their performance and benchmark their success against the market performance.

3. An increase in trading volumes to increase liquidity

Social trading provides an avenue for many people to enter the market – these are people that would naturally have been locked out the market because they still don't know how the market works. The fact that social trading lowers the access to trading means that many people can join the capital markets to increase liquidity. An increase in market liquidity also serves the advantageous function of increasing the possibilities for booking profits in the market.

Page 1 of 596