Those dabbling in the digital technologies of today are undoubtedly closely acquainted with two of the major phenomena in this domain: social networks and cryptocurrencies. Since none of these requires an introduction, in today’s article, we are going to look at how these two can intertwine into an organic combination, known as social crypto trading.
Social copy trading, also known as social arbitrage trading, has been well known to traders for quite a while already. In lay terms, this is a technique that implies copying a selected trader’s activities; a person willing to make a social trading investment chooses a trading “role model”, so to say, a trader whose skills are worth appreciation, and uses software tools to replicate the chosen trader’s market behaviour.
Needless to say, this method has the inherent drawback of copying any wrong decisions of the designated trader as well, and this could lead to losses of amounts surely deemed serious by someone new to social trading networks, as it is natural for newcomers to invest small amounts. Nevertheless, the technique has gained popularity for the absence of two major obstacles that often discourage people from taking a glimpse into the traders’ world.
First, it does not require one to be a competent trader; the most important decision to make is the choice of the trader to follow. Second, it rids one of the necessities to spend countless hours watching the market trends – there are social trading platforms in place to do the bulk of the work, leaving a person free to do one’s normal job or deal with daily routine in the meantime. The method has grown so popular that several large social trading companies have evolved to facilitate its use for their customers, ultimately making trading easier than one could ever imagine.
As we all know, volatility is one of the major traits of most cryptocurrencies as of today. While riskier, highly volatile assets have always been attractive for the more adventurous investors due to potentially high profit margins. This brought about a large crypto trading market that keeps on evolving and adopting techniques and innovations introduced for those more traditional assets. Social trading turned out to be fitting perfectly into the crypto environment – thus, crypto social trading is now becoming ubiquitous as well.
Initially, social trading in bitcoin proved to be the most sought-after, as the impetuous surges and dramatic downfalls in BTC rates followed one another. While, despite the amounts of available information, many people still find the concept and mechanisms of cryptocurrencies somewhat cryptic, no pun intended, resorting to social trading was one of the ways to protect oneself to an extent with the richer experience of more sophisticated crypto traders.
As other coins have been rolling in, crypto trading has become more diverse and complicated, the array of tools in use by traders and investors expanded respectively. Nowadays, social trading in crypto is one of the more appreciated automated crypto trading methods to use in order to mitigate the risk of losses or compensate for the lack of experience. Just like with the more traditional tangible assets or securities, an investor effectively makes one major decision – the choice of the subject to replicate.
Social trading in cryptocurrency is also great as a means to diversify one`s trading operations. One could assign just a specific portion of his or her crypto assets to be socially traded, thus creating a reserve to hold on to in case of a major loss suffered through more venturesome behaviour, or, on the contrary, choose to handle the bulk of one's assets in a more cautious manner while allotting a small share for high-risk, high-profit endeavours. It is also suitable for crypto investments in coins with less predictable, albeit potentially lucrative prospects. If this sounds attractive, be sure to find a reputable automated crypto trading platform to try out this trading tool.