3/3/2021 - Economy and Finance

The Social Trading

By roman gutierrez

The Social Trading

Today, the stock markets are strongly influenced by the opinions of political and business world personalities, on social networks like Twitter, where the Donald Trump case has become trading strategies and adoption of positions according to their positions, and recently the case of Elon Musk, who with its tweets often “move” the market of cryptocurrencies and actions.

We also see how important analysts now emit their opinions prioritly by the RRSS, even before their formal “conference calls”.

“Social Trading” is therefore trying to replicate what they are doing recognized traders and investors, to take advantage of financial information or shared opinions on major online forums or social networks.

“Social trading” allows you to operate online with the help of others, and often reduces the learning curve of the value markets. Users can interact with others, observe the operations of “popular inverters” in the value markets, replicate or copy their movements and even learn to invest.

Everyone agrees that social networks have democratized access to economic and financial information, and are helping to spread a greater culture of investment. However, there are also many deceptive deals on investment and trading topics, you have to validate and investigate very well every information, proposal and costs involved.

This is how new concepts appear in the financial world as they are:

  • The Cooperative Trading
  • The Copy Trading

    The Mirror Trading

Recently, from social networks like Reddit, individual investor groups have organized buying strategies in various stocks with high short sales rates like Gamestop, Nokia, BlackBerry etc. Companies with financial difficulties that made it rise temporarily, this process also fits within the concept of social trading, and is another example of the influence that can be exerted since the RRSS in financial markets.

Finally I share some advice to take into consideration for those participating in Social Trading:

  • Do not put on your social trading account more than you can lose tolerable!
  • Do not follow the first best operator on the platform. You must spend time in this and not follow it with a lot of money!
  • Did you find a good trader? Start first from a demo account.
  • Understand the risk level of an investment or operational strategy before following.
  • Be patient. If you have investigated traders or investors, you should not qualify your performance in the first weeks.
  • Take care of your Appearance levels.
  • Do not try to operate on all markets.
  • Validate the credentials, trajectory and licenses of each broker, advisor, trader or analyst that you intend to follow or work together.
Investments are like a varied fruit basket, art is in knowing how to choose the most appropriate risk/return.

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roman gutierrez

roman gutierrez

I help people organize their personal finances and investments. I am passionate about entrepreneurship and stock markets. I have 26 years of experience in the Professional Investment Administration. I am a Venezuelan consultant based in Buenos Aires.

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