What is social trading? Definition & Meaning - nextmarkets Glossary

Social trading works by choosing the right people to follow; those who make shrewd trading decisions and consistently achieve positive results through expertise and wise moves. At nextmarkets, we make this easy by enabling you to follow our experts and view every activity of their trading.

This means you can view their market analysis, observe their ongoing trades, see if they adjust their Stop Loss or Take Profit parameters and receive expert coaching along the way. And you can set up notifications within the nextmarkets online broker app to ensure you never miss an important move or decision.

Social trading leads to ‘copy trading‘, which enables investors to emulate the actions of another trader in real time on the nextmarkets platform. Every time the copied trader executes a trade, an investment is made at the same proportional amount for the copier. This practice enables people to spend less time actively trading, as others can do the work for them.

Of course, this is a risky approach, and there is no substitute for hard work in the world of investment, but learning from the actions of others certainly saves time in the long run. And it can help you to learn a few things about making good decisions in the financial markets.

There are a few terms you will need to familiarise yourself with if you are to become a successful social trader on nextmarkets: EA (Expert Adviser): This term refers to the top traders who can be followed to inform investment decision making. Some platforms enable you to develop an automated process that executes trades according to certain criteria.

Guru: A term for proven, recognised successful traders you can follow and emulate on your chosen trading platform. Slippage: The difference between the price at which you execute a trade and the price at which the trader you copied executed it. Sometimes you’ll get a better price, and sometimes you’ll get a worse one. Not all apps are user-friendly, and some platforms charge high commission – so read some reviews before downloading anything.

Even veteran traders with bags of expertise can’t be masters of every single market. Some specialise in certain asset classes like stocks or commodities, while others master certain geographical markets like Europe or the US. Social trading gives traders an introduction into new markets that they otherwise would not enter independently.

For example, someone who wishes to allocate funds to the market in Asia could do it by following a trader with a proven record of success in that market, rather than learning that new market from scratch. And the nextmarkets platform offers a wide range of online broker payment options.

Social trading is not always about lacking the time or experience to trade the old fashioned way. Many social traders are quite skilled and have the time to do the research, but just need to have a break from active portfolio management sometimes.

Short-term trading styles can be very demanding, and by emulating others you can take a break from the intensive and exhaustive processes of doing the research for yourself. Social features are advancing financial industries using tools we are used to in our casual internet browsing, and the social trading revolution is reinventing the way we think about finance and exercising our strategies on the nextmarkets platform.

Since the proliferation of online trading platforms, the growth of social trading has truly redefined what it means to enter the markets as a newcomer. It has provided us with the means to learn and develop our skills whilst actively engaging with the market. It gives us guidance that comes from people who are truly finding success in their investment work, with an enormously diverse base to draw from.

And it has brought traders together to work alongside one another towards a goal of universal profit and success. Gone are the days when every investor went to excruciating lengths to get leads, then defended their insider knowledge with their lives. The bustling social trading community benefits from sharing knowledge and observing one another’s actions, and it is all made possible by nextmarkets and other online investment platforms.

Every social trade made by an investor has meaning. Because every social trade is likely to be observed by other social traders, all of whom are looking for insight into what might work and what might fail. This is why it is in the interests of every social trader to work hard to find the right information to inform their decision making.

The activity of investors can impact the market, and with too many people following one another into certain actions there could be unforeseen consequences for the very things they are investing in. Every trade you execute on your nextmarkets account is meaningful, so you must treat it as such. With social trading, you have the support network of an active and rich community, as well as the expertise of hugely successful participants, to benefit from and contribute to.

Social trading is cooperative in nature, and doesn’t include the more competitive elements of conventional investing. Social traders can work together in trading teams, collaborating to find success on the market. Some people even go as far as to pool their funds, divide up research and share the information.

It’s a healthier environment where people learn from each other and share in the success that was previously reserved only for insiders and experts, and the nextmarkets community cultivates an atmosphere of sharing. Competitive trading will always have its place, and some people live for it, but it’s good to have an alternative, and social trading is the perfect answer for people looking for a radically different approach.