Social trading is a great way to benefit from the markets thanks to the knowledge of expert traders. Being able to invest and trade the financial markets without having to actually do the hard work, makes it an attractive strategy for many.
But what are the pros and cons of social trading?
Learn from professional traders. Experienced traders do the work for you and you can discover how successful trading works.
Combined knowledge. If you are a novice trader, you can gain collective knowledge and strategies from pro traders to help you on your trading learning curve.
Access information. Social trading allows you to easily access trading information either through expert traders or the social trading community
Gain confidence. By viewing the moves of expert traders, you can learn and gain knowledge on how you can strategically tackle the markets.
Getting over confident. Although you are following pro traders, you should never get over confident thinking you will always win. The volatile markets can turn at any time and this does not change for expert traders.
Becoming lazy. When you have someone trading for you, you may become complacent. You should still take time to evaluate the system and strategies that are being used, so you are also aware of what is going on and the reason for possible losses.
Inaccurate security. It’s easy to feel a sense of security when an expert trader has control of your funds, but it is important to keep in mind, especially as a novice trader, that losses will happen. There is no ultimate security that you will only have winning streaks. Keep expectations realistic.
Past performance is not indicative to future and winning strategies can cause losses in short ranges