Social trading has become a revolution, changing completely the rules of the trading game internationally. The main player in this new investing method is, without a doubt, eToro.
eToro pushed the copy trading idea in the mission to make trading a more accessible reality reaching millions of people, while before was a very elitists activity reserved to just a few.
Check out this eToro copy trading review to learn more about why they have become the leaders in the copy trading revolution.
What is Copy Trading?
Copy trading is an investing strategy very popular with more inexperienced traders and those that are not familiar with the specifics of a particular market. It’s a natural consequence of the rapid development of social trading where investors from all around the world can share their operations while others can copy them.
Basically, with copy trading, traders that are more experienced can share their ideas and strategies in the market, and other investors, maybe with less expertise, can copy them. The process can be manual or automatic.
However, just copying other traders’ operations doesn’t guarantee success in the market. Doing thorough research of who you are copying in order to make sure they are reliable, as well as gaining some knowledge of the assets you’re dealing with and the market where you are operating, are necessary steps to make sure you will make a profit.
eToro and Copy Trading
For a long time, dealing in the market was complicated. Investors needed a broker who would use their money to buy and sell actions or currency or would diversify their capital in a series of investments.
Not very long ago, online trading makes an appearance and started to change the rules of the investing game. Brokers lost their predominance, and while still necessary, they function more as a medium, making it possible for more people to trade in the market from the comfort of their own homes.
eToro was a huge player in this revolution. The internet had opened the doors of the busy stock market from Hollywood movies, to become a much more accessible option for those looking to make a profit.
And with the boom of the internet and online trading, there was only a natural transition that social media would get involved in the trading world. That’s how the idea of social trading was born.
In the beginning, it was all about sharing tips and ideas, as well as strategies and success stories of traders in the market. Chat rooms became quickly too limited and the social side of trading appear in the brokers’ platforms.
The next natural step was the birth of copy trading. If traders could share their ideas and strategies online, why not make it so some traders, maybe newer or beginners, could literally copy more experienced investors’ operations and deals.
Copy-trading was born and it has proven to be a huge success with millions of users taking advantage of its benefits. eToro has been recognized as the best copy trading platform in 2020.
Pros and Cons of Copy Trading
As with any other trading strategy, there are pros and cons to it.
While copy trading helps investors diversify their trading to markets they are less familiar with, it also has the risk of making traders lazy in researching the market or learning its ins and outs.
Having access to another trader’s expertise is a great bonus, and should be used as a learning tool. On the other hand, copy trading does not eliminate risk and requires research in order to make a wise decision.