Is it possible to build wealth with social trading? The answer is “definitely, yes”. With social trading tools, your strategy can be very effective. However, the overall success will depend on specific factors and parameters. Generally, the key to success is to select a proper social trader to follow. However, it is not the only parameter to bear in mind.
In this article, we will discuss how profitable social trading can be. Besides, you will learn how it differs from conventional investment approaches and why beginners should take mirror trading into account as a great tool to get started.
A lower-risk potential is one of the main benefits copiers can benefit. Conventional traders can lose their initial investments right away. The main challenge is to select an asset with the potential to grow. A stock can look really cool at first sight but in the long run, the security may lead to bigger losses.
Even when you see the price moving up rapidly, it does not mean the trend will continue. More likely, it will move against you taking into account unexpected market moves, volatility, and other factors. So, to trade successfully, you need to be a real financial expert. However, even exceptional knowledge does not prevent 90% of traders from failure.
This is where social trading tools appear to be a better alternative, as you do not have to apply fundamental or technical analysis. Copiers are not supposed to have specific financial knowledge. All they have to do is to select a social trader (signal provider) and duplicate his or her trades. Of course, it does not guarantee 100% success. At the same time, more and more professionals enter the social trading niche. The chances to find a perfect match to follow are higher than ever before.
Social trading can be extremely effective. On the other hand, it will be as effective as your introducing broker. For this reason, the chances of building wealth with a trusted and time-tested social trading platform are higher.
The stats show that the best way is to select a social trader who makes from 7 to 10% of return over the last few years. If one offers up to 20%, it looks more like a scam. You’d better avoid such trading signal providers.
Note: avoid IBs who make a profit on asset bull runs. Anyone can do the same. There is nothing special in such an approach.
Your social trading success will depend on your investment pool. The more you invest, the more you get. This rule works for the majority of securities and assets with the exception of penny stocks.
For example, let’s say you invest $300 while your potential return is 15%. It means that your annual income will be only $45. Not as much as you expected, right? However, if you earn 15% from the $10,000 investment, your annual profit is $1,500. With an experienced social trader, it is possible to make many times higher profits thanks to profit margins. Once again, choosing a successful IB is very important. This is why it is very important to find a successful social trader to follow.
Apart from selecting a trusted social trading platform and investor to follow, beginners can apply some more simple tips to improve their trading strategies:
If you still wonder if social trading can be profitable, we can say “yes, it can”. The approach can be very effective. The sum you can make depends on the volume of initial investments, your social trader’s experience, and other crucial factors you need to bear in mind.
This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.
