What is social trading? Definition & Meaning - nextmarkets Glossary

Last updated: 23.01.2020
Gerry Celaya
Author:
Gerry Celaya
Adviser
CFD & Trading
Experience
> 25 years

Looking to get involved in social trading with a platform packed with features designed to promote the concept? Let nextmarkets make that dream a reality. We allow you to access the work of leading analysts through our modern, intuitive trading platform.

Access your trades, accounts and all the latest insights in real time, benefiting from our expert coaches and a bustling community all at your fingertips. If you want to find your feet in social trading, or simply to find a better platform to experience it, register for a free demo account with the best forex trading platform traders could hope for.

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What is social trading according to nextmarkets?

Social trading is a special type of investing that allows you to observe the way your peers and trading experts behave in order to follow their trading strategies using mirror trading or copy trading. It requires very little knowledge of the financial markets and saves money over hiring traditional wealth managers, but does require the opening of a trading account.

Social trading has become more powerful through nextmarkets’ online trading platforms, where traders can interact with one another and learn from the skills and expertise of their peers. Whether you are a novice trader looking for a way to learn the markets and get a foot in the door, or a professional trader looking to diversify your portfolio, social trading is a good option for you.

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Social trading definition

Traders on the nextmarkets platform are uniquely positioned to try social trading for themselves. As a trader on nextmarkets, you are able to view and follow market analysis from our team of in-house experts, as well as view their market activities and copy their trades if you so desire.

Our platform can be accessed from the desktop app and our richly-featured mobile app, so you can keep an eye on the experts and your peers wherever you are. Whether you favour FX trading (Was ist Forex?) or the CFD option (What is CFD trading?), by following the principles of social trading you will have the help of experts and those ‘in the know’ to inform your decision making.

How does social trading work on nextmarkets?

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.

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Social trading basics

The core principle of social trading is the ability to follow the investments of other traders in the community. Of course, you don’t want to track and mimic the activities of traders who aren’t seeing great results from their own work. You will want to access information from recognised experts and the top investors in your networks to ensure the activities you are following have maximum chances of achieving success for you.

It also helps to be in communication with other investors in the community, as this affords you a support network for assistance. Do all you can to keep abreast of the latest leads and trends, get quick updates about successful individuals and healthy actions through the nextmarkets guides.

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We at nextmarkets like to think of ourselves as you own personal broker in the palm of your hand. You never have to feel alone, with a range of benefits like low margins and extremely competitive spreads. We also deliver investment ideas specially tailored to your trading habits. And our demo platform enables you to practice investing with nextmarkets, starting with 10,000 EUR.

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Saving time with social trading

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.

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Social trading offers real transparency

Many people let someone else make the big decisions for them, whether it be through a personal broker, a pension fund, or a bank savings account. The thing about these situations is that you often have no idea where your money is being invested.

With social trading, every trader you copy has a public profile that is open for you to investigate. Trader profiles and expert analyses on nextmarkets are full of valuable information to help inform smart decision making. When you decide to become a social trader, you provide yourself with the most abundant source of information and support available anywhere, and the nextmarkets platform is tailor made to ensure you get the most out of it.

Terms from the social trade glossary on nextmarkets

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.

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The social trading meaning

Social trading, and the similar copy trading, first hit the investment scene in 2008. It has revolutionised the way people invest their money, making the markets more accessible for lay people. It is all about people helping people to succeed, and the skills and talents of the very best in the business can be emulated in real time so that all can succeed.

It may sound too good to be true, but it is a real opportunity for you to succeed. The only catch is that you have to work hard to be active in the community, and you have to choose carefully who you will emulate on your nextmarkets account. And, of course, markets are volatile and unpredictable, so there is no such thing as a shortcut to success.

Gain exposure through social trading on nextmarkets

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.

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The social trading terminology explained

It’s called ‘social trading’ for a reason. It isn’t about simply taking a quick look at who is doing well and then copying every move they make. Online trading platforms that promote social trading provide you with a number of tools to make full use of the sophisticated investing principle. You need to observe and interpret the analysis of trading experts who make their work available to you.

You need to engage with the community to learn about the discoveries people are making and offer your own insights based on the work you have done on your nextmarkets account. And you need to get a diverse commentary on different aspects of the market to get a well-rounded perspective and make informed decisions. The ‘social’ part of the terminology means actively engaging with the rich, bustling community for the benefit of everyone.

Take a break from research

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.

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Did you know?

The nextmarkets promise is to give our all to safeguard your future as a successful trader. This is why we put special measures in place, like protection of deposits up to 20,000 EUR by the Malta Investor Protection Scheme. We are also backed by reputable global investors Peter Thiel, FinLab, Founders Fund and Falk Strascheg. And we allow you to get started with an initial deposit of just 500 EUR.

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How social trading defined modern investing

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.

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Get your introduction to social trading

At nextmarkets we offer an online trading demo account that gives you access to a CFD simulation platform for web, Android and iPhone. You start with 10,000 EUR and can follow analyses, getting a feel for how market analysis works and learning how to spot leads. There will be 14 market analysts trading shares, currencies, indices and commodities for you to observe and follow as you choose.

You will also have the option to activate free notifications, just like in a full-fledged account, so that you stay tuned in to all the activity no matter where you are. If you choose to progress to a full account, enjoy added transaction security with nextmarkets. Some online platforms also offer online broker with PayPal for ease of trade.

Giving each social trade meaning

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.

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The successful social trader defined

The person who will benefit from social trading must meet certain criteria. Fundamentally, the successful social trader will have a healthy work ethic. There are no shortcuts to success, and even when following the actions of experts and listening to the community you must put the work in to get results. You must be willing to learn how to examine and interpret market analysis, and do the necessary research and exploration to find the best sources of such analysis.

You must be prepared to engage with your peers, adding value to an active community that will only give you its best if you are able to give something in return. With the right work ethic, and by putting your energy into the right sorts of activities, you can flourish as a social trader in the nextmarkets community.

Cooperative vs competitive trading

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.

Discover social trading for free on nextmarkets

At nextmarkets, we are proud to deliver an innovative forum where you can learn to be a social trader at your own pace, exploring curated investment leads and keeping your finger on the pulse of all the latest expert analysis. And you can try it for yourself with no commitment, so you’ll learn if it’s right for you without taking any risks.

Register for a free nextmarkets broker demo account today and experiment with 10,000 EUR of virtual money to invest as you please. We provide all the tools and resources you need to succeed and prosper as a social trader – your social trading journey starts here.

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