12 Successful Tips For Social Trader

What is social trading?

Social trading is an innovative and exciting way to benefit with and from experienced traders. It involves automatically copying or duplicating the orders of other winning traders. They also call it copy trading, mirror trading and similar to the PAMM system.

Once the signal provider who is a professional trader enters the market, the same position is automatically opened and managed on your account. You will need to choose the trader you want to copy his or her trade. This is what social trading is all about. 

How to choose the best signal providers

  1. Take your time to look for a good trader who will not cause you losses. Here are some basic rules you should follow: 

  2. Look for a trader with a low drawdown percentage. That is the total amount you are willing to lose from your account in percentage. Knowing how much a trader’s account has been in the negative will help you see what the future holds. 

  3. Monitor the performance of every signal provider over time and go for the ones with a verifiable history of success. Do not be fooled by the short period of profitable trades. 

  4. What do traders say about the trader? If he or she has many negative reviews don’t give him or her the chance. Also, check the number of followers with real money. The more followers a trader has, the better. You definitely want to be part of the success of other traders. Remember the number of followers does not guarantee success, so check other factors. 

  5. Is the signal provider reasonably profitable? Look for traders with a positive profit-loss ratio. 

  6. Avoid high-risk takers who abnormally leveraged their accounts. Diversify your portfolio by choosing different signal providers according to trading styles or strategies

    Regardless of how carefully you selected your lead traders on social trading, unfollow them if you notice their performance is dwindling. If you spot any changes in your signal providers’ behavior such as a change in risk management or reduction trading frequency, it may signal the coming of rainy days, an undisciplined signal provider will be careless in managing trades.

    For example, a trader that is driven by fear or greed will keep on resetting stop losses and profit targets. If the trader experiences a drop in trading volume or periods of inactivity after losing trades then he may take many risks to win back the losses. Remember to act early enough. 

  7. Start by trying out your preferred trader on a demo account. Does it work? Some traders may also have other accounts with less impressive results while promoting the most profitable ones. Instead of basing your judgment only on the performance of closed trades, look for any open position the signal provider may have and include them in your calculation. Follow signal providers that trade in no more than two to three pairs of instruments. It is best to use a signal provider that knows his or her trading instruments well. Show your back to signal providers who use the martingale system. In this system, the trader is doubling positions after each loss with the expectation of recuperating the losses.

  8. Don’t put all your eggs in a single basket. Consider distributing your capital across different signal providers.

  9. Research signal providers thoroughly before committing your hard earned cash to them. It is best to use a signal provider with a proven record of at least 20 weeks and not two weeks. Watch your money management, and do not risk more than you are able to lose.

  10. Check how many trades the signal provider makes in a single session. You want to have sufficient funds and avoid risking too much capital. Remember that even successful signal providers go through a period of poor performance, so don’t give up too soon before you reap from their winning streaks. 

Selecting a social trading forex broker

It is impossible to engage in social trading without a Forex broker. It is a Forex broker that holds your money and executes your trades. Since you cannot test all Forex brokers, it is wise to follow useful tips here. 

  1. Decide whether to use a broker providing the social trading platform or a separate social trading platform like myfxbook. It does not matter. You can choose Tenkofx as your broker and connect your account to a social trading platform. 

  2. Does the broker offer a base currency of your choice? Forex brokers will offer you accounts in the currency where they are and other currencies. Most common currencies are USD, EUR, and GBP. 

  3. Find out the spread charge of the broker. Many brokers make their money from the spread, which is the difference between the buy and sell price. Shady brokers rip off their clients by increasing the spreads during certain market hours. Make sure you are certain of the spread and how much you pay for each trade. 

  4. How often does slippage occur on the brokers trading platform? Slippage refers to the difference between the price you see on the screen and the price at which you open a trade. Both prices are supposed to be the same, but if there is a difference, it means there was a delay in execution. So, find out how fast (after a trader opens an order) it is copied to your account. The longer the delay, the higher the slippage.

 These are the most important factors to consider when you want to use a social trading platform.