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Social forex trading and copy trading



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Forex social trading allows Forex traders to interact in real-time, sharing knowledge, strategies and methods. Less experienced traders can take advantage of the help of traders with more experience and even copy their trades and techniques.

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Social forex trading and copy trading

  1. 1. Social Forex Trading and Copy Trading Forex social trading allows Forex traders to interact in real-time, sharing knowledge, strategies and methods. Less experienced traders can take advantage of the help of traders with more experience and even copy their trades and techniques. They can subscribe to actual trading signals and have them executed on their own accounts. This is called copy trading. History of copy and social commerce A primitive form of the copy business began when some traders communicated in newsletters when they went to open a business. They would email their subscribers letting them know it was time to buy or sell. When the time came to cancel the order, an email was sent and the positions were closed. Later, some traders would use this same basic concept, only communicating with other traders in a chat room. For this to work, you had to trust the skills of the trader calling the shots. There wasn't much to do except personal experience, anecdotal evidence from those who had copied it, or the trader's reputation. As technology evolved, it was possible to replicate a transaction from one account to another. Forex platforms could track the success of the strategy and record all kinds of metrics so that everyone could see how successful it was. Anyone could subscribe to these strategies, and the same signals that would be executed in the original trader's account could be executed in the subscriber's account. The next step beyond subscribing to a trader and automatically executing their trades in your account is to interact with that trader. It's kind of a mix between copy trading and social media. You can observe other trades and duplicate their trades on your own. What is a PAMM account? PAMM short for " Percentage Allocation Management Module" PAMM is a copy trading system offered by many forex brokers. Copying transactions from a master account to one or more follower accounts and automates the distribution of profits and losses.
  2. 2. The main account manages personal capital through a PAMM account, and its trading strategy is copied to the Followers capital. How does PAMM work? You decide how much capital you want to allocate and to which traders. Once you allocate this money, it is added to the capital pot of the managing trader. You will receive the same profits or suffer the same losses as the trader during the same time period that you invest with this PAMM account, on a percentage basis. You (the follower) don't need to do anything other than monitor open trades. How does social trading and copy trading work? In traditional Forex trading, individuals generally used their understanding and knowledge of fundamental and technical analysis to form their own opinions on what would happen in the market. Maybe they would take market sentiment into account by asking their friends or reading a newspaper or financial piece. the broker When the time came, in the days before the Internet arrived, they would call their broker. These days we just click the buy or sell button on the appropriate currency pair. But the point is, the broker is the one who makes the trade happen. They find buyers and sellers and combine them. It is no different in social and copy trading. The signal provider or expert Signal providers are generally experienced traders, with a solid understanding of the market and its underlying strengths. They use this understanding to execute trades based on signs in the market that something is likely to happen and that can be leveraged. In social trading, followers can have all trades executed by an expert on their own account. This allows investors with limited market knowledge to profit by choosing the right expert to follow.
  3. 3. Trading platforms give a lot of metrics on how well the expert trader is performing, so you will have a clear idea of what to expect if you allow their trades to take place on your account. The follower The follower is a person who subscribes to a signal provider. They don't necessarily need to figure out what exactly is moving the Forex price or build their own strategy. They can simply use the expertise, understanding and strategies of the signal provider. In the case of social trading, you can follow an expert trader and all their trades will be executed on your account. What should I do to take advantage of copy trading and social trading? To start participating in copy trading and social trading, you will need an account on a platform that supports these features. It should be noted that all platforms that support copy trading also support social trading. Once you find a broker that supports the features you want, make sure that you are aware of any concerns with your account replicating transactions from another account. Evaluate the performance of the signal or expert you plan to follow. You may see various warnings regarding issues such as the number of trades on the account that are not enough to judge the signal or the trading quality of the expert. Whether or not the data is enough to trust them is your personal decision. Many signals and experts charge money to subscribe or follow them. You will often have to agree to certain terms of service to allow their transactions to be carried out on your account. Take note of all required settings. Risks of copy and social commerce Just like when you make the trading decisions on your own, a successful news event can move the markets in significant ways, which no signal, human or bot, can anticipate. Make sure your signals are within reasonable stop-loss and profit-taking levels and make sure you choose to copy them to your account.
  4. 4. If you subscribe to one or more signals, you may suffer from insufficient diversification, as all signals can benefit from the same strategy, leaving you exposed when the market conditions that made that strategy work are over. That is why it is important to choose signals which have a long experience. If you are dependent on a signal and that signal is suddenly interrupted or the signal provider drastically changes their strategy, it could expose you to trades that do not match your allocation or leave you without a plan. Other risks include technical risks like disconnecting or out of sync with the signals trader. Conclusion Copy trading and social trading are exciting developments in trading. It allows novice traders to benefit from the vast experience of talented and dedicated traders, providing a source of income for these expert traders and a profit for the novice trader. Thanks to social trading, learning the ins and outs of Forex trading has never been easier. Since Forex is the most traded and liquid market in the world, it makes perfect sense that copy trading and social trading are popular with Forex traders. - to discover more.