What is Social Trading and Is it Right for You?

social tradingThere’s a movement sweeping the investment space; and it’s becoming more popular with every passing minute. It’s called social trading. However, because the concept is very new, chances are that you’re not quite sure what it is, the pros and cons, or whether or not you should take advantage of the concept.

Social trading is a new trading strategy that was brought about by the popularity of social media. The reality is that consumers have been sharing just about every part of their lives through social media for quite some time now; and in the investing world, sharing could become a strategy. So, innovative members of the investing community decided to make social trading platforms like copyop, etoro, and StockTwits that were designed around the world of investing. This way, traders can share what they’re doing; ultimately giving other traders a way to see what successful traders are doing and the overall opinions of traders in the market. As a result, the increased insight helps traders to avoid the tedious research involved in finding and capitalizing off of trends.

Social Trading Pros & Cons

As with anything else in life, there are positive and negative aspects associated with social trading. Here are the pros and cons…

Social Trading Pros

  • Less Time Researching – First and foremost, because social traders share what they are doing, finding trends becomes much easier. All traders need to do is look into social trading platforms to see what other, successful traders are talking about. Ultimately, this gives them more time to trade.
  • Share Your Skills – As human beings, we are social creatures. This means that we like sharing our experiences with others; ultimately helping them to make better decisions in every sense, including investing. Social trading gives successful traders a way to share their experience with others.
  • Reduce The Learning Curve – There is a learning curve associated with just about everything we do. There is no exception with regard to trading. However, because beginners have the unique ability to learn from the pros in the social environment, social trading reduces the learning curve associated with trading.

Social Trading Cons

  • Insinuates That Research Is Not Necessary – While there is only one negative aspect associated with social trading, it’s a big one. Because it’s easy to find trends and capitalize off of them by following others, many beginners forget to learn how to do their own research. The reality is that following others could lead to gains and could lead to losses. Therefore, it’s important to do your own research regardless of how you decide to trade. Unfortunately, the basic idea of social trading insinuates that research is not necessary when in all reality, it’s very necessary.

Is Social Trading A Good Idea?

All in all social trading can be a very profitable endeavor; especially if you are new to trading. However, if you do decide to take advantage of social trading, it’s important to remember not to take what other traders say to be fact. The reality is that no one can tell the future, therefore, no one will be able to give correct predictions 100% of the time. With that said, social trading is great, but remember to always do your own research in order to back up what you find in the social space.


Join our newsletter

If you like Critical Financial, subscribe and get our latest content via email.

Powered by ConvertKit

Share this post:

Recent Posts

Leave a Comment


May the 4th Be with You: Star Wars Swag on Amazon

May the 4th Be With You: Star Wars Day Swag

It began as the punniest holiday ever but quickly grew into an earnest (if somewhat random) celebration of the long-running (and still... more →
People count the money to buy a house in future success.

Avoiding Mortgage Scams: Don’t Fall for Unreasonable Promises

If it sounds too good to be true, it probably is. That’s sound advice for almost all aspects of life, including the search for... more →
Eat for free for a whole month via the meal kit companies discounts for new customers.

How To Get a Month of Free Food: 9 Meal Kit Companies Offering Discounts to New Customers

Play your cards right and you might be able to line up a month’s worth of free meals if you were to try out all nine of the meal... more →
Generate extra cashflow -- here are 97 ways.

96 Awesome Ways to Generate Extra Cashflow

Who doesn’t want more money nowadays? We’ve got you covered on that front. Here comes a long list of different ideas on... more →
Valentine's Day gifts that won't destroy your budget

Valentine’s Day Crafts Are Romantic Rescue from Crazy Inflation

Fall for the hype this week and you’re out an average of $143.56 for Valentine’s Day. Crafts and other do-it-yourself tactics... more →

Ultimate Guide to Bitcoin — FREE Ebook!

Have we got something for you: a free ebook about bitcoin! more →
Get a flu vaccine.

Why You Need To Get a Flu Vaccine Right Now

Flu vaccines aren’t just for the elderly  anymore. Here are 25 reasons you should go get vaccinated. more →
Financially successful

Acquire the Trait All Financially Successful People Have

Financially successful people tend to all have a lot of self-discipline. Improving your discipline in one area of your life often spills... more →

What’s the Best Free Recipe App?

The Apple Store and Google Play together offer more digital cookbooks than you probably have room for on your mobile device. So which... more →
New tax law might slow down housing market.

What Will the New Tax Law Do to the Housing Market?

The new tax law will have a profound impact on the housing market, although in ways that go beyond the deductibility of mortgage interest... more →

4 in 5 Households Will Get a Tax Cut in 2018

Four out of five U.S. households will get a tax cut as a result of the legislation that President Donald Trump signed into law today. more →
Will bitcoin reach $100,000?

When Will Bitcoin Reach $100,000?

Bitcoin has accelerated its pace of appreciation in recent months, and if the current levels between $15,000 and $19,000 make you itch... more →
The Dow Jones topped 24,000 -- now what?

The Dow Jones Crossed the 24,000 Threshold. Now What?

Stocks appear to be increasing in volatility, yet the markets closed on Monday, December 4 with the Dow Jones Industrial Average is... more →
Peer mortgage

Should You Get a Peer-to-Peer Mortgage?

If you can’t get approved for a home loan from a bank, you might want to look into applying for a peer-to-peer mortgage. more →
Investment gifting is awesome.

4 Things To Know Before You Donate an Investment

While donations of any kind are appreciated, gifting investments benefits both the giver and the receiver. Here are four key things... more →
Are you wondering: What's the Relationship Between the Stock Market and Federal Debt?

What’s the Relationship Between the Stock Market and Federal Debt?

Wouldn’t it be wonderful if gains in the stock market could actually reduce U.S. government indebtedness? If that were true,... more →
student loan, student loan debt, college debt

How to Attack Your Student Loans upon Graduating

If you’re anything like me, you chose not to think much about your student loans while in college. They seem like a nonissue.... more →