There has been a major push in recent years for people to slowly feel more comfortable with trading. But as more people are making their way towards these different trading platforms, they are slowly starting to realize that it is a lot harder than most people will give it credit for. Luckily however, there is a much easier way to get around trading, and that is by relying on copy trading. But if you do not know a lot about copy trading, you might be confused as to how copy trading differs from social trading and how it works. In this guide, you will learn about how copy trading works, and how it is different from social trading.
What actually is Copy Trading?
Before you can compare copy trading to social trading, it is worth looking at both of these types of auto trading individuals before comparing them. Copy trading is a feature that you can find in a variety of trading platforms, which allows traders to copy the assets that a high profile trader is trading in. So if they trade in a specific type of asset, a platform technology will then also make you invest in the same asset. It is pretty simple to understand, and makes the learning experience much more dynamic.
Copy trading especially helps newcomers get into the fold of trading with relative ease. Not only do they help individuals that have a difficult time learning about the market, but can actively teach them about the market. It is important to understand that this is not an instant win button for trading. Instead, traders will now have to start researching the different traders who have an understanding of the market. They need to find a trader that has a similar trading style to them and copy from them.
What Is Social Trading?
The best way to look at social trading is that it is a major departure from the otherwise simple look at copy trading. Social trading is also a feature that many trading platforms offer, and it manages to combine investing and social media in the best way. Not only does it make it possible for you to follow your favorite traders, but you can actively track their different stats and see what types of assets they are trading in. Many social trading features take it one step further, as they even allow you to properly communicate with the traders without having to leave the platform.
It is easily one of the best ways that you can effectively improve at trading, since each trade that you make is from the thorough understanding of how your investment will affect your portfolio and how it will develop. The feature as a whole is more focused on building a sense of community and helping individuals learn more about trading without having to leave the platform. The only thing that is automated is how the platform gathers information, the information that it gathers, and the notifications that it sends about the trades that different people have made.
Major Differences between Social and Copy Trading
Social and copy trading are fairly different in how they focus on helping their traders, especially when it comes to helping new traders. By looking at the differences in more detail, you can better understand how each of them can help you and which one you should choose.
Social Trading Has a Much Higher Focus on Community
One of the biggest things that come with social trading is its very obvious emphasis on creating a community and helping people find their way around trading. Trading apps that will have a much higher focus on social trading will usually have various features that can make it much easier to communicate with the individuals who you will be learning from. The focus on community exposes individuals to a lot of helpful data about the market and the actually learn how deep the well for trading goes.
Copy trading doesn’t necessarily need to focus as much on community, since people will instead just look for information about the trader they want to copy from off the trading platform. Talking to the trader is completely optional, and you can often do that for your own satisfaction.
Social Trading Can Have a Steeper Learning Curve
Since social trading can expose individuals to a much larger ocean of knowledge, it has an obvious downside in that it can be hard to learn and get around. It can take you a few days just to understand what type of questions you should be asking the trader and if the trading results that they are experiencing is because of the market or is it because of a very small trend.
On the other hand, since copy trading does not necessarily offer much depth, it is almost instantaneous to pick up and start trading with. All you need to learn is what makes a trader good and if their trading style matches with yours. You do not have to sit through any tutorials or anything.
Copy Traders Let Others Make the Strategy for Them
Many traders like the fact that they can have something of a passive income with this trading strategy. All they have to do is choose how much they really want to spend on a particular trade, and other than that, they will be all right. Granted this does make it incredibly risky, but some platforms offer loss limits.
Social trading is a much more hands on trading experience where you will be focusing on making trades yourself with the knowledge that you accumulate. This is a very hands on experience, and it can require a lot of time to get used to.
The first thing that you want to do when you are looking for the right platform is see if they have good copy trading and social trading features. A good way that you can differentiate between the two is that one of them has a more hands on and active experience, while the other has a more hands off passive trading experience.
For more info about copy trading visit Zulutrade website.