Below is the New Version
It is not hard to see why social trading and social trading platforms are becoming more and more popular in the world today. Social media has grown exponentially, and the number of people communicating with these channels is a staggering 3.8 billion, according to 2020 figures.
That’s a lot of people, folks!
It has also become the perfect business model for startups of social trading brokerages. Why?
Well, the answer is simple. With an audience of 3.8 billion already present on social media channels like Facebook, Twitter, and Instagram, they share experiences, make new friends, connect with old friends, sell something, etc.
Social media sites have become an acceptable way for most people to connect to their chosen audiences and those interested in business opportunities. Ha-ha, bingo!
With this in mind, it creates a perfect platform to transact differently.
Like joining a social trading platform, find a “professional” trader and link up your trading platform to his, pay your money into your account, sit back, and watch the money roll in.
That sounds great in a perfect world and very far from the real world.
Unfortunately, It does not work that way.
I speak here from my eight years of experience in trading and understanding how the trading industry works from the inside. Brokers lure the unsuspecting public to join their trading platforms to open accounts for copy trading or trading on their own.
The truth is.
Why would you give your money to some stranger to invest and trade through a copy trade connection when all you have to go on is what he says in his profile and the results he publishes? That is the most insane investing decision you can ever make.
What I am about to illustrate to you should open your eyes to the absolute truth about copy trading and why you should avoid it. Most people joining social trading platforms have no prior knowledge of trading and are there because of the appeal and curiosity. The ‘social connection” with another person who appears to know what they are doing and you copying his trades.
Comprehensive trader training is non-existent with all the financial market brokers and social trading platforms because it’s not their business model. They are not in business to train you. They exist to make money from your trades.
They’re in business to get people to open as many trading accounts as possible and trade as often as possible. That is how they make their money. They could not care less if you make money or not. They rely on a high-volume turnover of trading accounts.
Aside from the fact that there is much to learn about the markets and market structure, it is not difficult to learn how to trade. It’s not a Ph.D. degree teaching either.
I will discuss more on Brokers in another article, and it was worth mentioning them for now.
Here is the trader’s Profile: (quoted profiles and questions are unedited)
I consider myself a rational trader and short to medium-term investor as I have previously founded and sold a brokerage that was based in (location withheld). I have a lot of experience in portfolio construction and I make decisions based on the growth potential, relative cost, and the amount of potential upside.
My comment:
That’s a new one ‘rational trader” - what the heck?
His experience is in portfolio construction. What has that to do with trading? Look what his decisions are based on! Ask yourself, seriously, would you invest with this trader?
Another profile: He is an Elite pro popular investor and trading for 3 years with a 69% return on investment according to his record with almost 18,000 copy followers you need 500 euro to start.
Here are some concerned traders’ questions. Many I can add have never been replied to. So where does that leave the newbie trader? Stranded of course, with no support.
Question: I am new, and I’ve never traded in my life, can you tell me please if {name withheld} is a good app? I mean I saw bad reviews like, they take money from your bank or put money when you withdraw very late, can you tell me please, is worth to put money long term, thanks.
My comment: His question was not answered.
Question: I can’t close each stock. I am stuck on the pending close button. Can u guys do something about it. I mistakenly choose a long-time investor.
My comment: How is this for an answer from the trader: idiot the market is closed
Would you tolerate an answer like this from your “elite trader” whom you are copying? and given your money to?
I certainly don’t think so.
Question: Hello, do you think is a good point to start copying open trades? thanks in advance!
Hi. I want to copy you. Just want to ask because you don’t trade cryptos, how much return is expected from stocks per year if i start now let’s say? What’s the average per year?
Question: Hello, may I know why your trading is stopped?
Sadly, many of these questions never get answered, meaning you are alone.
Another question: Hey! I’m new to {name withheld} and copied {name withheld} but only with £200. Can someone please explain to me how things work? Cheers to all!
My comment: What is this trader doing? He knows nothing and decides to invest unthinkingly and copy a trader!
Take a look at this question.
Hi, prob a dumb question, looking at jumping in on copying you. I am still confused so holding off atm, do I invest the $1000, then hit copy and leave it? or do I need to check in and move money, including hitting copy each time? And each month, or few weeks I keep adding more into my fund? And what happens if I only have $2,000 then no more to invest for few months, what happens then?
Do you see what I mean, folks? Talk about the blind leading the blind!
He wants to pay $1000 to follow the flock, prepared to throw money away with no idea (nor any trading ideas).
By the way, If anyone else is also giving away £200 and $1000, please send it to me. I think I could put it to use better 😊
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Here is the new version of the above article
Social media channels fueled the growth of social trading platforms. And the number of people communicating on these channels reached a staggering 3.8 billion, according to 2020 figures.
That’s a huge audience, folks! and a huge market to tap into.
Read here why social trading is a waste of time and money. And what you could do instead is uplift your financial situation and live a life of freedom. Do you want that?
With the mass audience on social media, it became the perfect place for social trading platforms to thrive. If you think about it, every person with a social media account has friends. They connect with old and new friends and build their audience with people they like and trust.
So, social media became an acceptable norm for most people to communicate with their chosen audiences, which also set the stage for conducting business on social media.
With this in mind, it created a perfect platform to attract buyers and transact business. People talk and share ideas, and what better place to promote than on social trading platforms?
The concept of "social" is already acceptable to most.
In no time at all, social trading platforms mushroomed and attracted clients. Like-minded people could get together on social trading platforms to make quick bucks! Getting help from your favorite social trader and copying his trades became very appealing.
With accounts set up taking only a few minutes, you are off to the races!
That may sound like the perfect idea in an ideal world, but in reality, it's very far from the real world of trading, that is!!
Unfortunately, It does not work that way, as I am about to reveal the shocking truth about social trading.
How can you believe a trader's profile and the results he publishes on a social platform?
How do you know if the profile is accurate or not? How do you verify his trading claims? Many traders on these platforms use pseudonym usernames. So you have no way of knowing who the natural person is or if his claims as an expert are actual.
To fuel the fire, most trading "gurus' on social trading platforms have no prior knowledge of trading or qualifications in finance.
Trading in this environment is literary, like the Wild West.
The brutal truth about brokers
To make matters worse, trading brokers are in business to get people to open as many trading accounts as possible and trade as often as possible. That is how they make their money.
They could not care less if you make money or not. They are not in business to train you either. They exist to make money from your trades. They rely on a high-volume turnover of trading accounts to make their money. Comprehensive trader training is non-existent with all the financial market brokers and social trading platforms because it’s not their business model.
Aside from the fact that there is much to learn about the markets and market structure, it is not difficult to learn how to trade, and you don't need a Ph.D. But copying trades from gurus on social platforms is not the answer. Hopefully, you are starting to realize this!
While looking through the profiles of traders to copy and follow, I found the following amusing.
Traders Profile one
While scrolling through a social trading site (name withheld), I found a "guru" trader to follow. He described himself as a rational trader and short to medium-term investor with experience in portfolio construction. He makes decisions based on growth potential, relative cost, and upside potential. He also mentioned owning and selling a brokerage but did not say what kind!
Immediately, the alarm bells rang when he said his experience was in portfolio construction. To my knowledge, the trading mindset differs significantly from the inside mindset for portfolio construction. So, I would not trust this trader's decisions.
You cannot compare the financial markets to construction. There is no correlation between the two.
The bottom line is I would not follow nor copy this trader.
Trader profile two
This trader says he's an elite pro "popular investor" and has been trading for three years with an impressive 69 percent return on investment (what we don't know is in what context this is. (collectively over three years or yearly returns) with almost 18k followers, you must invest 500 Euro to copy his trades.
This profile looks very enticing, and who could resist the temptation not to copy his trades? On this platform, the broker pays a "popular investor" when other traders copy his trades. The more traders copy him, the more money he makes (from how much they trade). Remember, the broker does not care about you and whether you make money or not. They only care about the volume of trades and get paid from the spreads. (difference between the sell and buy price)
It's a win for the pro-investor and not necessarily for you. It's a typical profile that will suck in new traders and investors. It's as risky as any other offer to copy trades, especially when you know nothing about trading!
You would think participating in social trading would be a more supportive environment than trading on your own. This is not the case with what I discovered. The opposite is more a true reflection of social trading.
Loneliness is more evident in social trading than what you think and believe. I found several questions from participants that went unanswered. So, we can deduce that there is no support and care for others in a social trading environment.
These are some of the critical questions that went unanswered.
" I've never traded before. Can you tell me if this app (name withheld) is good? I saw terrible reviews like they take money from your account. Is it worth investing long-term? His question was never answered.
Another guy says he can't close each stock. The pending button is showing. Then he says: " I chose a long-time investor.
He gets this answer:- Idiot, the market is closed! Would you tolerate a solution like this from the “elite trader” you are copying? And someone you paid to copy?
I certainly don’t think so.
Question: Hello, do you think it is an excellent point to start copying open trades? I appreciate any help you can provide.
Hi. I want to copy you. I want to ask, because you don’t trade cryptos, how much return is expected from stocks per year if I start now, let’s say? What’s the average per year?
Question:
Hi, that's probably a dumb question. I am looking at jumping in to copy you. I am still confused, so I am holding off on payment. Do I invest the $1000, then hit copy and leave it? Or do I need to check in and move money, including hitting copy each time? And do I keep adding more to my fund each month or a few weeks? What happens if I only have $2,000 and then have no more to invest for a few months, what happens then?
I'm sure you'll agree that social trading and copying other traders are not a wise choice. You read the pitfalls and the situations you can get yourself into.
Now
If you were the person asking the last question, you had a choice to spend $1000 - $2000 on a professional trading education conducted by a qualified professional and former bank trader. Would you choose a professional trading education or mess around on social platforms?
I guess you would choose to get trained by a professional. Am I correct?
Imagine you decided on a professional trading education. You gained all the knowledge possible to trade professionally, became a champion at managing risk, and learned to recognize high-probability trades.
Where could you be in 6 months, a year from now, or two years? How would your life change?
Where would you be living?
This is how you can turn your life around. You only need to make a choice.
Your first choice is to invest in yourself with a professional education and not follow "guru" retail traders.
The choice is yours. Make it a wise choice.
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