Social Trading

Greetings I hope you are well.

Just a quick post to ask for your experiences if any of social trading. I do see many traders getting seemingly very excellent returns and wonder if it would not be smarter to develop a asset class and trader diversified portfolio than play the markets myself.

The pros are well documented but it would be nice to receive feedback on the reality

The key word, there, is “seemingly”.

There are reasons it appears that way.

It seems to me that the two most important things to know are …

  1. The figures presented are usually selective, concealing some important details. The techniques used by the traders who are incentivised to have “followers” typically revolve around whatever the criteria/monitoring-methods/ranking-systems in use at the sites where they attract followers, and are designed to “score well” according to those criteria, rather than to be safe and reliable.

  2. The methods that determine the “top-ranking services to follow” are typically methods that will cause them inevitably to crash and burn, in the long run. [B]There’s absolutely no reason to imagine that the traders/services who have been most successful over the last 6 months will be successful over the next 6 months, and many reasons strongly to suspect the exact opposite[/B].

In other words, it’s very easy to be fooled: knowing what’s really safe to follow is a skill-set all of its own, and one that needs detailed understanding and familiarity. In my opinion, that’s all effort, time and energy that you could much more productively apply to your own trading education, rather than to trying to copy others.

This may possibly help/interest you. :wink:

There’s a reason regulators require firms to make the statement “Past performance may not be indicative of future results.” Yes, there are those who are quite consistent. This is a very, very small group, though.