Forex Social Trading

Social trading is a combination of investment methods and strategies based on the 21st century Internet paradigm of online social networking. The underlying factors of social trading borrow from certain aspects of prominent social media sites like Facebook, Linkedin and Twitter.

The Rise of Social Trading in the Forex Trading Community

Online social networking has managed to thoroughly transform our lives by providing attractive, efficient and user-friendly outlets for communication, collaboration and media distribution. Social media has created an extremely dynamic online ecosystem that is perfect for conducting economic activities. For the business community, social media fits like a glove thanks to its dynamic networking aspect. For online investors, the effectiveness of social media started with media distribution. The trading of financial instruments, whether it is performed online or otherwise, is heavily dependent on information gathering, dissemination and analysis. To this extent, social media empowered investors by allowing them to not only easily access news reports and economic data releases, but also to share and discuss such information among their peers in an expeditious and friendly manner. In other words, social media initially served to bring online investors and day traders closer together in dissecting matters of interest to their communities. That was just the first step in the evolution of social trading and how it has ultimately come to be an integral part of forex trading.

Forex Social Trading

In recent years, social trading has been adopted by several online investment communities, from institutional investors who closely follow the action at Wall Street today traders who invest in securities on the major discount brokerage houses, and from traders of future contracts on commodities to individuals who engage in the lucrative activity of forex trading. Of all the online investment communities that have welcomed social trading in their midst, the forex trading community stands out as a shining example of how social trading strategies and the wisdom of crowds can bring higher transparency and economic advantage to the fast-paced world of foreign currency exchange. Look over more: http://forex-bloggers.com/four-common-forex-trading-mistakes/

The Positive Impact of Social Trading

There was a time when the modern concept of social trading would not have been looked upon kindly, and in fact may have been treated with contempt by stalwarts who believe that forex trading should be approached with a certain level of isolation. When social trading arrived on the scene, some self-professed “old-school” forex trading experts dismissed the idea as a gimmick; a simple extension of the much-maligned Yahoo! Finance forums of yesteryear where a few less-than-ethical day traders gathered to disorient the community and engage in dubious penny stock promotion schemes. Social trading is nothing like what these old-hats purport it to be. While it is true that decades ago forex trading was in the purview of lone-wolf types who used archaic jargon such as “trading cable” to describe the USD/GBP currency pair, forex trading in the 21st century has undergone a radical change.

The impact of social trading in the foreign currency exchange markets has been extremely positive, as it has managed to dispel myths and misconstructions about forex trading in general. An important aspect of social trading is about opening up the world of financial instruments to anyone who is interested in participating. Internet discount stock brokerage firms attempted to do this in the past with the use of clever marketing that managed to bring in potential new clients but often failed to retain them. There is a certain level of complexity involved to trading, and nothing works better to overcome intricate concepts than the support of a vibrant trader community in which members engage socially with each other. Social trading enables platforms where traders can meaningfully connect with each other for the purposes of learning and increasing profits.

A New Model for Forex Trading

Before social trading, a typical forex trading arrangement consisted of very business-like and cold interactions between clients and their brokers, advisors, market analysts, or portfolio managers. There was a certain preference by brokers to establish a certain distance from their clients. The reasons for establishing such boundaries were varied.

Social trading has done away with the secretive behavior described above by bringing individual investors to the center of the action. In the case of forex trading, which takes place in a decentralized global exchange where sovereign banks and day traders can participate simultaneously, a social trading platform is only natural. Traders from around the world have a lot to learn from each other, and social trading enables them to do so in a way that favors human interaction. Forex trading is affected by global occurrences, from monetary intervention by central banks to the herd instinct that traders follow in response to certain events. The best way for forex traders to cut through all this noise and avoid information overload is to become members of a social trading platform.

How to Avoid Forex Scams

All the regular internet surfers might come across different sales pages selling several products related to forex and have huge hype. All these products or websites claim to be the best in online forex trading offering big money in the shortest time period but without investing too much capital. Anyone can use these products even without any knowledge of trading. People mostly get shocked after purchasing these products and come to realize that these just tactics for getting more online customers. So, in order to avoid these scams and helping you out some tips are mentioned below that will help you a lot:

Look out for forex trading track record

Though it seems simple and related to common sense but still there are many traders who buy forex trading systems without getting information about the track records. In this case, there is nothing to wonder about their loss. You should not get attracted to statements like 100% success, ever financial freedom; earn millions in just two years and things like this. Despite this you must search for things that exist in real such as trading statements which brokers use regularly.

How to Avoid Forex Scams

Read Expert Reviews

For avoiding forex scams reading expert reviews is of great importance. Read reviews that are unbiased about any product related to forex. You can find reviews about forex products available on different sites and blogs. These reviews not only help you in avoiding scams but also offer information that targets your specific needs.

Checking proof of Income

There are many websites having content and products related to forex trading but only an authentic one has proof of income on the site. These proofs offer you a feeling that the company stands behind its products and also prove its effectiveness. However, trading system’s authenticity is not proved by income proofs but still it assures that system is legit. Income proofs also tell a lot about the past performance of the trading systems. So, you can easily get an idea that whether it is a scam or a genuine system.

Searching largest drawdowns

All the forex strategies have drawn downs but the thing to search is the largest drawdown. Basically, drawdown means that account for trading may experience margin or drop in value but trade is open. Reasons of these losses aren’t easy to understand but you must look largest drawdowns such as 5%-8%. Trading strategy of the system tells that they can be off days or even months. These make sure that you’re comfortable with the downswings.

Avoid transferring cash on the internet

Transferring cash over the internet is risky and there are chances that it gets lost. There are also many companies that don’t mention their contact address on their sites. Also, avoid these sites. For more info: http://www.consumer.ftc.gov/articles/0060-10-ways-avoid-fraud

Accreditation of forex brokerage firm

Before starting the business with any Forex firm makes sure that it is accredited with United States commodities future commission (CFTC). Most of the companies are without this accreditation and you must avoid them.

In short, all the above-mentioned information will surely help you a lot in avoiding forex scams.