In the past, trading success depended on investors’ experience and practical knowledge. Today, various digital inventions and tools allow newcomer investors to earn sizable profits without requiring years of learning.
Social, copy, and mirror trading are three different yet conceptually similar trading strategies that allow newcomers to follow in the footsteps of experienced investors. Let’s explore each one of these mechanisms and determine which one is best for you.
What is Social Trading
Social trading practice emerged after the digital revolution of the 2000s, allowing investors to enter the online market and acquire insights from their more experienced peers. Social Trading implies joining a community of traders who exchange their experiences about the most and least successful strategies in the trading market.
This tactic is far from being an automated cash cow, as social traders still have to make their own decisions. With this approach, investors can analyse the logic behind numerous successful strategies and apply it to their unique circumstances.
Advantages of Social Trading
Social Trading is an excellent vehicle for brainstorming and exchanging thoughts among the group of traders, fortifying the analytical skills and the second-hand experience of community members. Thus, it helps traders learn from the mistakes of others and optimise their strategies.
This strategy gives room for critical thinking and constructive debate rather than mindlessly following the methods of more accomplished traders.
However, this approach is not always an ideal practice for newcomer traders. It’s crucial to remember that market circumstances and variables change every single day. Thus, what worked in the past might not be viable anymore. So, it is crucial to stay vigilant and analyse the proposed strategies carefully.
What is Copy Trading, and How Does It Work?
Copy Trading leans toward a more automated approach compared to the previous method. With this practice, traders can replicate the strategies and decisions of more experienced and renowned investors. However, traders can still modify and tinker with copied strategies. Thus, there is still room for freedom and unique tactics.
This mechanism is an excellent choice for individuals and businesses that wish to generate passive income from Trading. While this practice requires some attention and effort, it is mainly automated and takes considerably less time than a full-time investment process. With this approach, traders won’t have to delve into the complex inner workings of the trading industry.
Mirror Trading Defined
Finally, mirror trading is the most automated method for engaging in the trading process. This practice requires finding an automated trading platform that features necessary mirror trading algorithms. These algorithms identify the best investment patterns within the market and apply their findings to your investment portfolio.
Traders can still choose from the general trading strategies, though, selecting their desired level of risk, investment scope and the period of operations.
Mirror trading is perfect for investors who want to dedicate as little time as possible to the trading process. The automated algorithms fully dictate every decision and tactic. Naturally, even the most advanced algorithms do not guarantee success and consistent returns.
Social, copy, and mirror trading are contemporary strategies that new traders follow to shortcut their road to success. Copy and mirror methods involve following a trader’s footsteps fully or partially. At the same time, social Trading requires the trader to craft their own strategy after listening to the advice and recommendations of investors in different communities.