What is social commerce or social commerce in French? What are its advantages and disadvantages? How is it different from copycatting? Discover in this article everything you need to know before immersing yourself in this new shared universe!
1. What is social commerce?
Social trading is a form of trading where the user executes trades based on information and recommendations collected from other traders through specialized communities, discussion forums, etc. In this way, the trader develops his trading strategies. Here, the trader acts on his own, i.e. he makes his own decisions, rather than simply copying the actions of others. In other words, it works closely with other traders to assess the market independently as opposed to copy trading.
2. What is the difference between social trading and copy trading?
In connection with social commerce, the user himself makes the decisions regarding the transactions. This is not the case with copy trading. What the trader does in copy trading is basically to link their account with another trader’s (master account) and automatically copy their trades. In other words, social trading is independent trading, where the trader thinks and makes decisions himself.
3. What are the benefits of social trading and copy trading?
- Social commerce has obvious advantages:
- the opportunity to get information and recommendations from other traders, learn from their ideas and grow as a trader;
- social commerce is the ability to self-determine, control transactions and close them on time; it is also a good opportunity to check one’s own commercial results;
- the trader can save his time by conducting independent market research and analysis and developing his own trading systems.
- Advantages of copy trading:
- the ability to simply connect your account to a master account and earn money by copying profitable trades made by another trader; in other words, by doing copy trading you have the opportunity to have a totally passive income;
- it is very convenient for beginners: they do not need to spend their time developing their strategies, testing, controlling their emotions, etc.;
- the ability to check other traders’ statistics before making decisions by joining a master trader;
- the ability to compare statistics from different dealers and choose the most suitable one to connect your account with theirs;
- an opportunity to check your trading results and disconnect your account from the master account when the latter is not performing well.
4. What are the risks of social trading and copy trading?
In addition to the benefits, social commerce is also associated with risks.
- Risks of social trading:
- traders who share their trading ideas and strategies may also make mistakes and their trading is not ideal; following their decisions can lead to loss as well as profit;
- there can be many traders on social trading platforms. Each of them may have different perceptions of the situation and therefore different points of view; in such circumstances, users may encounter difficulties in deciding who is right and who is wrong and developing their own strategies;
- using social trading platforms can make the user lazy and lose motivation to grow. He may refuse to think for himself and take responsibility for his own actions; by trading using social trading platforms, the user may lose his analytical skills instead of developing them.
- The risk of copy trading:
- Signal transmitters do not always offer profitable and winning signals; it may happen that the main account loses money instead of gaining it. As a result, the user who linked his account to another account also loses money and earns nothing;
- Relying on signal transmitters can also hinder the user’s development as a trading professional.
5. Where can I do social trading?
Users have access to a wide variety of trading platforms including Binance, Bitfinex, Bitmex, Bittrex and many more. One of the most prominent and user-friendly platforms for clients is Bitget, the fastest growing crypto derivatives trading platform in the world. Bitget offers its users interesting products such as Grid Trading and One-Click Copy Trade. The first is a trading tool for channel edges when prices move in a sideways direction. This is a handy tool for auto trading. The second is a copy trading solution, when the user connects his account to the main trading account (the one that emits signals) and makes money from profitable trades on it.
6. What should I be aware of when it comes to social trading?
When a user starts in social trading, he needs to take into account certain factors that will affect his trading results and ultimately the financial result. Without a doubt, the most important decision to make when trading on social trading platforms is choosing traders to follow and listen to their decisions. A successful and trustworthy trader is one who:
- shows relatively stable and fertile profits over the long term;
- trade on a stable system with well-defined rules for setting stop-loss and take-profit levels;
- actively discuss their strategies and trade with other traders; he does not ignore requests from his peers and is always ready to share his own ideas and answer any questions he receives. Such a trader tends to want to maintain his own good reputation on a platform or forum. It is not intended to provide false information.
The Bitget platform provides all the necessary information about traders and any investor can easily find out the trading history and overall profitability of traders.
7. Why is social commerce so important to the industry?
Social trading is a great tool to attract new entrants to the industry, increase overall trading volume and grow the industry in general. Social trading is a way to get the general public interested in crypto trading and markets. As for master traders, they can get paid to spread their signals while their followers can profit and grow.
Social trading is a great way for beginners to learn about the cryptocurrency industry, improve their skills and transition to independent trading. Moreover, it is very important that social trading attracts new investments in the industry and boosts the crypto market.
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The Cointribune editorial team unites their voices to express themselves on topics specific to cryptocurrencies, investments, the metaverse and NFTs, while striving to best answer your questions.