The great change happened in 2008 when binary options trading appeared on the market.
Suddenly, anybody could take part in this form of online trading regardless of their age, education or station in life.
So, what happens when binary options trading comes together with social networks which have become an integral part of the 21st century?
The result turned out to be a handy new way of trading which branched out in two directions – social trading and copy trading.
The Basis of Copy Trading and Social Trading
The basis of both copy trading and social trading is for traders to follow each other, which is the gist of all social networks in general.
In most cases, when people get interested in binary options trading they try to educate themselves using information online as well as the one provided in educational materials on various broker sites.
Yet, what happens with copy and social trading is that the process of basic education about binary options trading is cut short. Potential traders interested in binary options trading need to spot fellow traders who they find to be successful and then follow their actions. This is proving to be a rather handy approach since it presents a great opportunity for traders to learn via observation and repetition.
Further benefit can be manifested in strong bonds which may develop between traders in which those with more experience mentor and govern those who are only starting out.
This approach to binary options trading is becoming quite popular in recent times with binary options brokers supporting this interesting new feature.
Is there a difference between social trading and copy trading?
While, in general, there are great many similarities between those forms of trading, global traders who are seriously considering trading binary options in this way should know the difference between the two.
The link between social and copy trading is in the following of other traders. However, the difference is in the way that traders place trades.
Social trading, as suggested by the very name, is a form of social activity and plenty of trading platforms have chat rooms as well as forums which serve as a communal place to discuss market conditions and trading.
Interested trader finds another trader to follow and monitor which trades are being carried out. If the trader finds that his peer is doing well he/she can choose to do the same.
However, social trading does demand some knowledge since it is necessary to spot a potentially unsuccessful trade.
Copy trading, while similar, functions like a much-loved computer option – copy-paste. To put it simply, traders find a peer trader they wish to follow and then copy their trades to the letter.
For obvious reasons, this may appear as a fail-safe manner of trading since all one needs to do is find a professional trader and copy what he/she does.
Nonetheless, traders worldwide need to be aware of the fact that not every trade can be successful all the time and binary options trading is a combination of profits and losses.
Keeping this in mind, traders are accepting the risk that comes with copy trading since all actions from the trader they follow are copied to their own account, be it a good trade or not so good.
How to Start with Social and Copy Trading?
Learning period with social trading and copy trading is shortened, but despite this, we still urge traders around the world to dedicate some time to get better acquainted with the basic facts.
The best starting point is the trading platform and learning about various tools, features and options traders may use.
It is not possible to engage in this form of trading with all brokers so traders will have to spend some time to find binary brokers who do.
Global traders can also take a look at these trading platforms which are self-standing platform rather than those being integrated with iFollow. These platforms work as specific social networks and they include daily published lists of most profitable traders.
The next step is to seek peer traders which have a good track record, in most cases that points to serious and mature binary options traders who have been trading for some time now.
Is Social and Copy Trading a Good Choice?
There is always an element of risk present in any form of trading, and both social and copy trading are partial to it. Naturally, doing some research so as to find a platform wich is bot technically advance but also secure via proper security measures such as SSL protection is always a good start. Traders worldwide also have to get familiar with the trading tools and features available on the platforms.
Careful consideration has to be dedicated to selecting a trader which is to be followed. By taking some time to properly assess possible candidates for following and inspecting the success of their trades is an important step. As we already pointed out, loss is a part of trading but by taking sufficient time to wisely select “mentor trader” chances for obtaining profit are much greater.
Additionally, most platforms supporting copy and social trading also provide traders with a chance to impose an investment limit which means that traders contain the element of control. Hence, traders place a limited percentage of their funds and this was introduced as well because traders did not carry out trades on their own but rather used a projection made by another trader.