Making a lot of money on the stock market is a dream for many people, yet this dream often alludes them.
They find that they simply don’t have an adequate knowledge of the inner workings of stock markets and they also don’t have the time available to learn them either.
In the past, this would have put a stop to your stock market dreams, but nowadays that really doesn’t have to be the case. One big reason for this is the growing popularity of something called social trading.
So, what is social trading, how does it work and why could it be beneficial to you?
What is social trading?
Social trading platforms allow both seasoned and newbie stock market traders to connect with one another and to share information on the trades they are making.
Experienced investors can make their portfolio and trades visible to other users on the site, so that newbie investors can then ‘copy’ their trades if they wish to.
This will then allow them to make the same trading decisions as some of the most successful investors out there with minimal knowledge or time investment required.
Does social trading really work?
The great thing about social trading is that you don’t have to take anyone’s word for it when it comes to whether it is successful or not, as traders recent and long-term histories are available for you to see via their account profile.
For an example of what we mean here, we could look at the profile of the successful social trader Jaynemesis on the eToro platform.
Jay has attracted much attention on the site as he has made some wise trades in recent times, especially trading in cryptocurrencies like Bitcoin and Ethereum.
Jay also focuses on investing in big tech firms. He currently has over 8000 followers and over 300 other investors ‘copying’ his trades. With what success?
In the past 12 months Jay has made almost 100% profit on his trades and those who have been ‘copying’ him will have made the same amount of money.
As with any kind of investing, past performance is no guarantee of future performance, but these results show that the concept of copying the trades of others via a social platform could certainly be a profitable exercise.
Why would successful investors share their trades?
You may be wondering why successful traders would be happy or willing to share their trades with others in the first place? Well, the answer to this is that they also have something to gain out of it.
Social trading platforms give successful traders a percentage of their annual assets under management when people copy their trades, effectively allowing them to become their own fund manager.
As we can see then, social trading has opened up new possibilities and opportunities for both experienced and less experienced traders, with the chance to make money for both classes of investor.
So, now you know what it’s all about the real question is, will you be joining the social trading revolution?