Binary options are considered to be the most popular and innovative type of financial trading thanks to their ability to adapt to average traders and not only the trading elite specialists. They are easy to understand and everyone can trade them: teachers, workers, Wall Street employees, students and pensioners alike. As binary options are accompanied by powerful technology it is understandable that they open more and more possibilities every day.
When Mark Zuckerberg founded Facebook in 2004, nobody believed that it will become a worldwide phenomenon and that it will change the way we communicate and make decisions forever. What Facebook did for communication, binary options did for financial markets as it has become more convenient and democratic. Now, there is a new change in sight. Social and copy trading are becoming increasingly popular, and not surprising, they combine social networks with binary trading as they are created around the trading community.
What are Social & Copy Trading?
Social & copy trading are new possibilities in binary options trading that enable traders to follow others and place trades in the same way. Usually, binary trading requires long and detailed education about the market and financial movements in order to place the right trade at the right time. For this reason, many brokers create great educational sections for learning and improving strategies.
Social and copy trading make this process faster as traders only have to find reliable colleagues and follow their steps. This enables them not only to trade with significant profit but also to learn about trading in a practical manner. Such connection builds strong and lasting relationships with traders, as beginners often see more experienced colleagues as mentors. Peer-to-peer trading is fairly new, but the number of traders who are preferring this type of trade execution is in constant growth, and more and more brokers support this feature.
Social Trading in Practice
Binary options trading is now easier than ever, but traders mustn’t consider social and copy trading as a solution to all their problems. Both of these innovative types of trading require engagement. Traders first must learn about the platform and various tools and possibilities in order to execute trades properly. Then, a good and successful colleague with constant success rates are required. Many people trading on binary platforms are oriented only to short-term profit, and such traders should be avoided. Mature traders who understand the market are a much better choice and more reliable. This way traders can leverage knowledge belonging to others.
Besides, traders must also choose the right platform for social or copy trading. There are still some brokers who didn’t introduce this feature to their platform, but they are an exception to the rule. One of the most popular features among SpotOption brokers is iFollow (formerly SpotFollow), a tool that enables following of successful traders.
Among the most popular brokers who support iFollow are:
Some brokers with proprietary platform also decided to add this useful feature which only shows how important social trading has become. One of them is Porter Finance with simple feature – Social Trading.
There are also platforms specialized in social and copy trading like
These platforms are not integrated features on broker platforms, like iFollow, but are single standing websites that work like specialized social networks for traders (similar to automated trading platforms). Lists of most successful traders are published on a regular basis so it is much easier for beginners to choose which ‘guru’, as they call them to follow.
Social Trading vs. Copy Trading
Many traders often confuse social trading and copy trading or even believe that they are the same thing. While their basic principles are the same, there are some important differences every serious investor who wants to make a profit must understand.
Yes, both terms are considering trading that involves following other traders. Placing trades, however, is what distinguishes them from each other.
Copy trading can be seen as copy/paste option on a personal computer. Trader selects a peer to follow, and trades, according to their affinities and settings on the platform are directly copied. Many see this as a great feature as it surely is a no-brainer. Successful traders place successful trades, so why not copy them? Well, even the most profitable traders can be wrong and place a bad trade, which is then instantly copied to another user account. This highly limits the possibilities for money management as traders are completely dependable on the ‘guru’, but in case the ‘guru’ is right, profit is gained.
Social trading, on the other hand, really is more social. Some platforms even provide chat rooms and forums where traders can discuss market conditions and trading conditions. The trader can choose which peer to follow and see their trades. If the trader finds the trade profitable, then he copies it, and if not, leaves it alone, and trades some other time. This type of trading is better for responsible money management but requires a certain level of knowledge. The ability to recognized potentially unprofitable trade is of highest priority, as the trader makes the final decision and is responsible for the result.
Is Social Trading Reliable?
Just like any type of investment, social trading is only reliable as the platform that provides it. The platform used for this type of trading must be reliable, secure and technically advanced, but trader must understand all tools and features as well, in order to understand the trades placed.
For this reason, FBO recommends trading only with social trading platforms listed in Robot section for auto and social trading.
Besides selecting a reliable platform, traders must select reliable trader to follow as well. Sometimes, losing is inevitable, but there are still many traders who understand the market and price movement and who do the great analysis before placing trades. This is a type of trader one should follow.
What is important to mention is that in most cases, copied and social trades often have a limit when it comes to investing, which means traders can place only a certain percent of their funds. This rule is existing because, trader didn’t make a projection by himself, but is simply following another trader.
Are Social & Copy Trading Future of Binary Options?
It is hard to say what future holds, but considering present trends, social trading will be developing as times go by. Even today, many traders choose to deposit only with brokers that support either social or copy trading, so we can presume that this trend will develop further.
Social and copy trading is the next big step in the evolution of binary options, as it makes trading even more user-friendly. Social trading is extremely appealing to beginners, who don’t have enough experience to make a proper analysis and who don’t know the true meaning of all financial reports and data that is published on everyday basis.
Great substitution for social and copy trading is automated trading. Try Binary Options Robot instead.