Social trading is a relatively new way of online investing that allows interested users to access information via social networks.
In contrast to fundamental analysis and technical analysis, with social trading the information is generated by other users, thus allowing newcomers to the industry to trade without necessarily having to go through the analysis phase.
In essence, investment decisions are made on the basis of processes carried out by other traders, who are often more experienced and better able to interpret what is happening in the industry and the market.
By linking your profile to another trader, you will be able to set an instruction to copy part or all of his or her positions in the market, so that you will ‘follow’ what your trusted investor has done.
In other words, once you have chosen the trader you want to follow, if the trader you want to follow opens a new position, you will also open a new position; if the trader closes the position, the same position will also be closed in your portfolio.
Naturally, if the trader makes a profit, you too will make a profit, while – just as intuitively – if he makes a loss, you too will make the same loss.
In short, a nice helping hand for all traders and a useful tool to shorten the learning curve for newbies to online trading.