In this series of posts I’m going to be looking into the recent phenomenon of Social Trading and Copy Trading. I wan to see if I can generate a decent enough return from a minimum investment and check if this could classify as another potential online revenue stream that I can tap into during my travels.
The concept of Social Trading and Copy Trading is that you are using the wisdom of others to make your investment decisions. There are a number of social trading platforms that give you full access to invest in markets, indices, stocks, commodities and the like.
These platforms also give you statistics on other traders who are on the platform so you have full visibility of the trades that they make. Not only this, but if you find a trader whose style and returns you particularly like, then you can choose to copy this trader, something known as ‘Copy Trading’. This will allow you to automatically copy all of the trades that they make, but scaled to the amount of money you have invested. So if a trader invests 10% of his portfolio in a certain trade, then you will also invest 10% of your portfolio in the same trade.
The idea behind this is that you are investing in people and their investment strategies, rather than in individual markets or trades themselves. The power of social trading is that it makes trading a lot more accessible to the average Joe, like me!
At the moment, I know very little about Social Trading and whether this is worthwhile or not, so this series of blog posts over the next few months will give you full details of my experience and my honest opinion of whether this is worth pursuing further or not.
Through this series, we’ll have a look at the basics of social trading and then try and analyse some of the different social trading platforms. I intend to start off by investing in the most popular social trading platform ‘eToro’, and if that goes well I will try and branch out into other platforms as well.
My experience and understanding of trading is limited only to a basic understanding of stocks and shares and investment funds, so whatever happens, I’m guaranteed to learn a lot a long the way!