Social trading, trading signals, PAMM/MAM accounts are all social trading functionalities that involve earning money on the Forex market without having to decide on whether to buy, sell or close your trade. The idea behind social trading is that traders can capitalise on other successful traders’ knowledge to make smart investment decisions. For example, a trader may view other traders’ portfolios, track their overall performance and get a better understanding of their trading strategy. This method of trading has increasingly become popular among both novice and experienced traders – newbies can follow savvy investors while advanced traders can refine their own trading strategy and expand their portfolio further.
Key Benefits
Overall, the benefits of social trading can be summarised as follow:
- start with a small investment
- access to international markets
- diversify your portfolio
- connect and follow other talented traders
- copy their trades automatically and learn from them
- save your time
- easy to use with a social interface
Choosing Signal Providers
Social trading requires you to spend some time learning how to pick signal providers. In a previous article, we outlined some rules for choosing a signal provider. Here is what you need to consider:
Never risk money you can’t afford to lose
No matter how successful a signal seems to be, it is important to bear in mind that the forex market is incredibly dynamic. Unforeseen events such as physical disasters, Central Bank decisions and political situations may spark ‘explosions’ in the markets and notwithstanding the system you choose to copy, your profitability merely depends on luck.
Think which is the best strategy for you
An ideal investment strategy is the one that satisfies the following criteria:
- The strategy is well-tested and has been in the markets for several years
- The strategy is stable
- The money manager uses Stop Loss
All in all, social trading is based on the idea that collective wisdom is more effective than individual acumen and new traders can capitalise on this rewarding way to trade the financial markets.
Tickmill encourages all social trading methods, enabling you to trade using MQL signals*, Autotrade* and even become a Multi Account Manager manager*.
*Check if available in your country.
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Losses can exceed the initial deposit.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.