Thanks to advances in technology over the past decade, the world of trading and markets has changed massively. It’s now easy to trade in crypto while still in your pyjamas through a variety of different smartphone apps. However, while it’s easy enough to get started, it’s making a profit that takes time and which is likely to take plenty of research. Social trading, therefore, is a phenomenon that’s taking off that could make things all the easier and more appealing.
Social trading pretty much does what it says in its description. Much in the way you’d follow influencers on Instagram or connect with professionals in your trade through LinkedIn, this system enables you to follow expert traders and to see what’s likely to be taking off in a big way. It’s an interesting premise in that it gives newbie traders a lot of confidence, but there are some concerns.
If you are new to the idea of social trading, it’s probably a good idea to read some reviews. For example, the eToro Australia review over at The Bull is a great place to start. The Bull is a leading name in trading advice, and eToro happens to be one of the biggest names in social trading right now.
Let’s dig a little deeper into how social trading works in practice.
How social trading works
While comparing the concept to something like Instagram or LinkedIn is reasonably simple, we need to look beyond this idea of it purely being another social networking style.
Social trading’s principles rely on the fact that trading newbies often need simple, appealing platforms from which to start. Brokerages, by and large, can appear inaccessible, exclusive and even expensive on the whole. If you are a casual trader just getting started, there can be a lot of money to lose if you’re unsure what you’re getting into.
Effectively, social trading broadcasts trades to followers. If connected to a social trading network, you will enable your decisions to reveal themselves, by and large, to the public. That means you can build influence, and if you are a newbie, you can see what kinds of movements the more popular and successful traders are already making.
Even better is that you can ‘copy’ or ‘re-trade’ what other people do. This works similarly to sharing a post on Facebook or retweeting a comment. Therefore, it’s effectively sharing the wealth.
Potential challenges
At a technological and ideological level, social trading is surprisingly simple. Of course, many people want to get started on the markets, but unfortunately, much of the scene can feel like a closed-off club.
However, for social trading to succeed, there needs to be a strong buy-in from willing participants. For experienced traders, there’s the appeal of building up a profile as an ‘influencer’, much in the same way as you’d expect on other social networks and platforms such as YouTube. Of course, the benefits for complete beginners should be pretty obvious. Why risk buying big when you can follow the leader, so to speak?
That said, there may be issues long term regarding buy-in. If everyone buys popular stock or shares, then the value of them might decrease. Therefore, we need to consider this phenomenon’s appeal over the years to come.
Is social trading the future?
Many people believe that social trading is the future, and it is hard not to get on board the train. Whether you are interested in trading Bitcoin or traditional stock, many of us are so intertwined with social media on a daily basis already that the idea seems reasonably familiar.
That said, browsing and trading behaviours are constantly changing. Therefore, while the social concept is fantastic in the here and now, where might we be by 2025? There is an argument that platforms such as Facebook and Instagram are so embedded in our daily lives that any further social innovations will automatically be welcomed with open arms.
Indeed, there are strong brands such as eToro who are already making waves in this regard. It’s therefore worth following these bigger platforms to see what happens next.
Arguably, it’s never been a better time to be a beginner in trading. There are many, many different ways for you to get into shares, crypto, ETFs – you name them. Social trading is an exciting concept, and we will have to see how it fares in terms of profitability, and popularity, for the years to come. Why not take a look at a few reviews?
