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Let’s focus on the purposes and specifics of social trading. What strategies can be used by traders and investors for better results? First of all, let’s start with what social trading is.
What is social trading?
Social trading, in simple terms, is a widespread phenomenon that “brings Forex to the masses.” It concerns the field of margin trading on Forex.
Social trading is a mutual help mechanism through which beginners can learn from the pros by observing their actions. Professionals can also benefit from social trading as they can share their experiences.
Social Trading is available at Exness, one of the leading brokers known for creating comfortable trading conditions for the company’s clients and several rewards programs. Read more about Exness Trading Rewards.
Let’s take a look at the four most common trading strategies.
That is perhaps the most well-known type of active trading. This term is often used synonymously with the term “active trading.” This method, as the name suggests, involves buying and selling securities on the same day.
Positions are closed on an opening day; none of the positions will be held overnight. This method is usually used by professional traders, but e-commerce has made it affordable for beginners.
Some consider positional trading to be a buy-and-hold strategy rather than active trading. However, positional trading performed by an experienced trader may well be a form of active trading.
Traders using this strategy usually come into play at the moment of a trend reversal. In this situation, there is usually some price volatility as the new trend tries to strengthen. Swing traders buy or sell as volatility rises. They typically hold positions open for more than one day but still for a shorter period than position traders.
Scalping is one of the fastest strategies used by active traders. It assumes earnings on the price difference between sell and buy orders, as well as order flows. Traders usually make money on the price difference by buying an asset at the bid price and selling at the asking price.
Copy trading is a particular type of trade that involves copying the transactions of professional traders.
The purpose of copy trading and the regular one is to open positions and then close them as soon as the value of the asset rises. In this case, the choice of the optimal moment of entry and exit is not determined by the investors themselves but occurs automatically – by creating a mirror deal of a well-known trader.
Suppose, for example, that you have £5,000 in your account. You will be able to create a currency portfolio with the help of copy trading worth £2,500, which will be controlled by autopilot. You can then manually deposit the remaining £2,500, for example, in stocks to diversify your investments.
Who is social trading suitable for
Social trading is an excellent learning alternative for newbies or those who don’t have time to trade themselves. It can also be a good way to “recuperate” after your own losses because it is better to see how successful traders work once than to read or listen to the stories of some bloggers (far from Forex trading) about mythical development opportunities in this area.