With every passing year, the binary options industry rolls out all manner of new and innovative tools, features and standards for traders at all levels. In all instances, the focus is usually the same – enhancing the trading experience in general and helping investors enjoy greater success. Needless to say, some of these enhancements do a better job than others – many disappear just as quickly as they arrive.
Nevertheless, there’s one particularly interesting example to have emerged over recent years, which right now is proving to be one of the most popular takes on binary trading to date. The concept of social trading has been around in one form or another for some time now, but it is only as of relatively recently that it has begun hitting its stride. Not only are more binary options brokers than ever before offering their own ‘follow’ and ‘copy’ features, but a growing number of brokers are actually setting up specifically to focus on social trading as their primary product.
Indeed, the way in which social trading has exploded in popularity as of late suggests that this is one phenomenon that isn’t going anywhere, anytime soon. By combining various elements of social networking with binary trading, the way in which many traders approach and work with the trading community in general has been revolutionised like never before.
For anyone yet to try out social trading for themselves, now could very well be the perfect time to do exactly that.
What Are Social & Copy Trading?
Though copy trading and social trading are entirely different concepts, they focus on the same basic principle. Traditionally, getting started in the world of binary options trading meant first getting to grips with the trading platform itself. Which is technically the easy part, as what follows is an extensive and on-going process of dedicated study, detailed education and commitment to financial and market movements, in order to ensure that the right investments are made at the right time. For outright newcomers, this has the potential to be not only rather daunting, but a long, slow and challenging process while learning the basics. Nevertheless, it has always been seen as an unavoidable process for any trader looking to succeed.
What makes social and copy trading entirely different is the way in which those looking to do so have the opportunity to entirely (or at least partially) forego the second of these two steps. Rather than having to go about the process of studying the markets personally and deciding which trades represent the best possible moves, you instead simply locate successful traders and mimic their actions. In these kinds of trading environments, those taking part permit all other traders using the platform in question to gain access to basic information as to their investments, wins, losses and general activities per week, month, year and so on. This way, it becomes possible to pinpoint those who seem to be making all the right moves and quite literally copy their actions. But of course, you get to choose how much or how little you put on the line, while adjusting other elements of the trade like expiry times, should you wish to do so.
If it turns out that they do in fact know what they are doing, it pays off for both of you!
Social Trading in Practice
As far as the trading community in general is concerned, social trading represents both a positive and a negative thing. As far as critics are concerned, one of the biggest problems is the way in which far too many traders get into the binary options industry and become solely reliant on the actions and activities of others. Or in other words, they never really learn a great deal about binary options trading, for the simple reason that they don’t have to. They limit themselves to the example set by others, which has the potential to go one way or the other. They may find themselves stuck at a relatively remedial level, never coming close to hitting their full potential or becoming leaders in their own right.
There are also those who warn against the use and overuse of auto-copy tools, which are again becoming extremely popular. This is basically any instance whereby a trader is selected on the back of their positive actions and results, after which the platform automatically copies their trades, in accordance with the preferences of the trader in question. For obvious reasons, automated trading in all its forms is something to be approached with due care and attention.
Still, the fact that this kind of trading is both delivering excellent results and growing in popularity all the time suggests that the benefits far outweigh any potential criticisms. And as already mentioned, more brokers and service providers than ever before are jumping onto the social trading bandwagon – something they wouldn’t be doing if they didn’t believe it was here to stay.
Social Trading vs. Copy Trading
As already mentioned, there are many similarities between social trading and copy trading, but the two are in fact different concepts. They both have the potential to yield the same basic benefits, but it’s nonetheless worth taking into account the specifics of each, in order to determine which represents the best choice for you.
First up, copy trading generally refers to an additional tool or feature provided by a binary options broker, which enables traders to quite literally ‘copy and paste’ the actions of others. You take a look at who’s making all the right moves, you decide you want to emulate their actions and so you set in place a trade that mirrors theirs. They may be right, they may be wrong, but this is seen by many as a great way of both minimising risk and also taking note of any patterns, trends or opportunities that may otherwise have passed you by.
What makes social trading different is the fact that it is infinitely more social by design. Generally speaking, platforms that are built around social trading operate more like social networks than traditional trading platforms. Traders are able to join, create a profile, add other traders to their list of contacts and generally interact with the entire trading community in chat rooms, with instant messages and so on. The basic principle is the same – leading traders with the highest success rates lead by example. But in this instance, the trading community at a whole can interact, discuss important topics and generally offer each other support and guidance. It is therefore easy to see why newcomers to trading in particular are currently making a beeline for the very best social trading services.
Should I Get Involved?
In terms of whether or not it is worth signing up and getting involved in social trading, it all comes down to your personal preferences, trading style, experience and so on. For example, if you are already an experienced and successful trader capable of making the best possible decisions for yourself, there may not be a great deal to gain from social trading. That is, unless you are the generous type and would like to share your knowledge and example with others.
By contrast, if you are new to social trading or for any reason would like to see how the professionals get the job done, social trading could be just the ticket. The thing is, if you can track down a social trading platform that doesn’t demand excessive deposits and is run by a reputable provider, there’s really no reason not to at least see for yourself what it is all about. Especially given the fact that social trading and copy trading in general are set to become such a big deal on a global basis going forwards.
The Future of Binary Options Trading?
While social trading certainly has its place secured in the future of binary trading, it is unlikely that it will replace conventional trading anytime soon. The simple reason being that there will always be thousands of leading traders who simply are not willing to give away their insights and details of their activities for free. Quite to the contrary, such individuals often work in relatively advanced positions, providing signals, direction, account management and so on for traders as a paid service.
Nevertheless, social trading as it exists today is all but guaranteed to continue growing and evolving over the years to come – all of which is nothing but positive news for traders at all levels who enjoy the added social element. In terms of winning over new customers, social trading already seems to be doing a pretty good job and is likely to continue as such for the immediate future at least.