Why Social Trading Is a Good Solution for Novice Traders?
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Let’s think together what novice traders should do if they want to make money from the beginning, and they don’t want to blow up their capital?
First of all, we need to describe who novice traders are. You may guess the following:
– a novice trader is a boy or a girl who starts trading in the financial markets from scratch,
– a novice trader dreams about making money from thee 1st step and financial independence in the future (but as soon as possible!)
– a novice trader doesn’t have knowledge, experience, and tools for reaching his or her goals!
There are millions of novice traders in the World! The majority of them fail!
It is obvious that if novice traders start trading using real money at the beginning of their trading carrier, they will have 99,99% chances to blow up their capital. It is just the question of time.
If you are a novice trader and you can make several successful traders in any market, don’t be so happy! It means nothing! In the long run, you will destroy your profit and the capital as well. So, if you really hope that you will make money in the financial markets without knowledge, experience, and tools – you are a very naive person! My congratulations! Markets will tell you who you are)
But what to do if you are dreaming about the first profit as soon as possible??? What should you do if you don’t want to blow up your money in several trades???
From my point of view, you have two options!
If you have a lot of money, like several millions of USD, you can invest this capital in a solid hedge fund and allow their professional traders to manage your capital. You will get a small profit and low risk. You will be able to get income and avoid additional risks. As you don’t need to trade by yourself, it means that you have free time. You have the amazing opportunity to invest your free time in getting knowledge and prepare yourself for trading. Yes, this approach is not for everyone. What if you don’t have a lot of money? What should you do?
If you don’t have a lot of money, the 2nd option is for you. Social Trading must be your choice! I guess not all of you faced with such a term. But it is really simple! I’m talking about copy trading.
What is Social Trading with mode details?
Here is the definition from Wikipedia:
Social trading is a form of investing that allows investors to observe the trading behavior of their peers and expert traders and to follow their investment strategies using copy trading or mirror trading. Social trading requires little or no knowledge about financial markets and has been described as a low-cost, sophisticated alternative to traditional wealth managers by the World Economic Forum.
It works like this: you connect your trading account with traders’ accounts and copy all their trades on your account automatically.
Sounds great, right? So, social trading, or copy and mirror trading as alternative terms, it is a good solution for novice traders!
It allows you to avoid stupid mistakes trading by yourself when you have nothing for profitable trading. It allows you to start getting income from the beginning. You just need to read several tutorials about how to pick the right signal providers and allocate your capital properly.
Social trading is a really good solution for novice traders, which can protect your capital from your stupid mistakes and give additional income at the same time. And again, as it is with the 1st option, you have the amazing opportunity to invest your free time in getting knowledge and prepare yourself for trading!
Another important thing is in getting trading experience with your real money under the control of experienced traders. Yes, you will watch how your equity will change when trades from your signal providers are copied and managed on your account. You will see the real trading with all ups and downs. You will see that real trading is not about the profitable trades all the time! You will face with losing trades, periods of drawdowns, profitable periods. You will see real trading as it is, and this experience will help you in the future with your own trading!
Of course, social trading won’t make your rich very quickly. There are not so many ways and opportunities that can provide such results even for professional traders with many years of experience behind them. But social trading can become your starting point in the financial World. It can help you not to lose money as many novice traders like to do, but keep them and get experience and profits at the same time. I advise you to think about this way as it is a very good solution for novice traders.
If you know any other options, how novice traders can start profitable trading without knowledge, experience, tools – please, write in comments! I will add the most interesting and workable options below this post in updates. Let’s discuss it! Thanks for your attention!
P.S. as I don’t use like-bots and other solutions that show great “interest” to my posts, I will be grateful if you support my work by your LIKEs and comment. Of course, if you can do it. The feedback from REAL people is priceless!
This post does not provide financial advice. It is for educational purposes only! You can use the information from the post to make your own trading plan for the market. But you must do your own research and use it as the priority. Trading is risky, and it is not suitable for everyone. Only you can be responsible for your trading.
Source: TW DLavrov