Trading like an expert has never been easier
Social trading is an innovative practice where you piggyback on trades from experts to achieve consistent profits. Why? Because it takes discipline, consistency, great judgment and immense expertise to do well in the crypto market. However, it takes years to hone these qualities and most traders never get to this point. So, what better way than to simply follow what the best investors are already doing?
It is a great exercise for beginners
Most beginners tend to lose money in the crypto markets. This is because they jump into the market with a half-baked investment strategy, or they rely entirely on luck.
With the volatility of the crypto market, sometimes even blind trades can make money, but it’s not a viable long-term strategy at all. Crypto social platforms allow you to follow expert traders, read about their plans and even invest money in their capital pools.
There are certain risks involved, but the long-term volatility is significantly reduced with an expert at the head of the decision-making process. In addition, you get to learn from their subjects, which drastically shortens your learning curve.
How does it work?
It’s easy; countless social trading platforms have emerged in recent years. Some popular exchanges have also started offering the social trading feature.
These platforms have several experts on board whose investment and trading strategies can be accessed and copied. A few platforms will also provide you with in-depth trading history and performance charts of their experts.
All you have to do is create an account on one of these platforms and choose an expert you want to follow and copy. Some platforms offer this service for free, while others require a subscription fee.
This fee can be a flat fee, such as $0.99 for each copied trade and a fixed percentage on profitable trades above a certain amount. Other platforms use a subscription/plan-based model with a monthly/annual fee.
What is it for the experts?
Social trading or copy trading would have seemed unethical just a few decades ago. Imagine that you are good at what you do, and that someone else does it just as well without putting in the work.
However, on popular social crypto trading platforms, experts receive a predetermined percentage of investor profits when they make money on copied trades. This motivates experts to do even better and become popular on these platforms to further expand their capital base.
Things you need to remember
Here are some things to keep in mind before starting your crypto social trading journey –
a) Verify the authenticity of the chosen platform
Ensure the authenticity of the platform by thoroughly reviewing their website and by reading and viewing online reviews about the platform. Check the number of downloads, visitors and expert traders.
b) Do your research before you start following an expert
It would help if you narrowed down the experts you should follow before you start investing your money. Look at how long they have been trading, their core trading philosophies, their track record in the past and so on. Start following and copying their trades only when you are absolutely sure of their expertise.
c) Start small to test the waters, diversify
There is always some risk that comes with trading. The same applies even to the experts. When starting out, be sure not to put all your money on one trader, but to diversify between different types of traders with different risk tolerance. In this way, you neither miss the gains nor risk everything on one trader.
Conclusion
Crypto social trading is an exciting development that is going to bring more capital and traders into the markets in the coming years. The platforms are getting smarter every day and provide more insight into the trading abilities of expert traders. This is an opportunity for new traders to learn quickly and significantly reduce the learning curve.
THIS IS A PARTNER POST
First published: IST
