Social trading is democratising the forex trading arena. With companies like eToro letting anyone with an interest and a bit of starting capital try their hand at forex trading, it’s never been easier to get into trading. Here are a few of the pros and cons of getting into social forex trading!
Flaws of Traditional Forex Trading
When it comes to getting into the trading game, it can be a very appealing and inviting concept. The ability to quickly and easily grow funds, all without leaving the comfort of your home seems almost too good to be true.
And in terms of traditional styles of trading it is. Getting into forex trading is incredibly daunting and intimidating, and learning to play the game in terms of gauging risk and potential profit is a path lined with some very deep pitfalls.
With virtually no-one offering guidance, or willingly giving away trading tips, it’s basically impossible to know where to start, and the risk can figuratively paralyse you, despite your best efforts. It’s a steep learning curve, with costly implications for any missteps and on top of that, it requires fair investment to be worthwhile.
Pros of Social Trading
Social trading combines the modern obsession with interconnectedness and trading. With these systems, you can follow an experienced trader and copy their moves, essentially letting anyone with a bit of cash try their hand at forex trading; SocialTradingGuru.com allows you to compare the best platforms to ensure you get the most of the social trading options that are available.
Obviously, the biggest boost of social trading is its simplicity. Without any complex stocks monitoring, steep learning curves or difficult concepts to conquer, you can be away within hours. Many sites even offer training money, to let you try your hand, and get a feel for the system.
This means that anyone can learn to trade, making it the perfect entry into this game. As well as the low difficulty, you also don’t need to have that much cash to start off. You can get started with your trading career with as little as a couple hundred. How’s that for a low entry bar?
Essentially it combines the flexibility and lucrative nature of home forex trading, with an instructional copying system that allows anyone to learn and get started immediately.
Cons of Social Trading
But that doesn’t mean it’s a foolproof way of growing your savings. While you are following experienced and potentially skilled traders, they can make mistakes, and when a well-followed and copied trader makes a bad choice, that error is going to echo through all of the other followers’ investments, meaning everyone can end up losing a fair bit of cash.
But that’s really no different to any other form of trading. Trading at its core is a form of gambling, so there’s always going to be some risk. Some social trading companies only let you copy a pro investor with around ten percent of your total capital, allowing you to minimise losses (but also minimise profits). It’s a delicate balance.