What is social trading?

Social trading is a new investment model that is based on connecting a user community where more advanced traders share their strategies and beginners can see, follow, learn and copy the most successful investors.

This model incorporates the fundamentals of social networks but applied to the world of trading. We are in a social world, in which we live connected to the Internet practically permanently, interacting with other people who share our hobbies or interests and being part of a community. 

Community trading is a way of connecting traders from around the world who can share their strategies and discuss them with other traders.

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For a beginner it has the great advantage that you can follow experienced traders, analyse their strategies and copy their operations to obtain benefits, taking advantage of the experience and knowledge of people who have been investing for much longer. Due to this possibility of copying the operations of other traders, social trading is also called copy trading.

Community trading is becoming very popular worldwide in recent years. For this reason, more and more online brokers offer this service that allows experienced traders to share their strategies and receive commissions that increase the more followers they receive and beginners to find the best traders that fit their risk profile and copy easily operations with the amount of money they consider appropriate.

The online brokers that offer social trading are generally assigned to develop rankings of investors who share their strategies and to generate a series of complete statistics for the results they are getting.

How does social trading work?

1 - If you want to start investing through community trading, the first thing you should do is select an online broker that offers this service.

2 - Next you must create your account with the said broker. Generally, you will have to fill out an online form and send proof of identity (ID card, passport, driver's license) and proof of address (a recent utility bill such as electricity, water or telephone that shows your address). You can then make your initial deposit of the amount with which you want to start investing.

3 - Once your account is created, the following is usually to complete your profile on the social trading platform in the style of what you would also do on a social network.

4 - The following is to help you with the rankings and advanced search engines that your online broker offers you to locate the traders with the best strategies and that fit your risk profile.

5 - Once located, you can follow these traders, see the operations they carry out and analyse their results. If you want to copy their operations, you usually have to indicate how much money you want to do it with and automatically the operations made by the trader you are copying to will be applied to your trading account with the online broker.

At any time you can stop following a trader or stop copying their trades. You also have the possibility of trading several traders at the same time, which is a good way to diversify your risk.