To answer this question, first of all it would be awesome to know what social trading. Social trading is a form of investing that gives investors the rather rare opportunity to observe the trading behaviors of their peers traders and expert traders, follow their investment strategies through what’s called mirror trading or another form of trading called copy trading.
Social trading basically entails looking at the techniques and strategies traders— in most cases winning or expert traders— are using, and also copying these techniques.
Before anything like social trading surfaced on the Internet, traders and investors always went through the rather stressful path of learning technical analysis and understanding a lot of terms that will make the market understandable and readable for them to a reasonable extent and then use them as a basis to form their investment decisions in the forex market.
The learning of this fundamental and technical analysis takes time for most people to grasp. Another worthy thing to know is that it takes a lot of effort to learn because there are numerous technicalities and technical terms involved. But with social trading, traders and investors don’t necessarily need to learn all the technicalities and terms. Because social trading gives them chance or a platform where they can use the investment decisions from the trading data-feeds of expert traders.
One great benefit social trading has given to traders is that it has reduced the process of learning the rather boring technicalities and strategies that comes with learning all that’s needed to learn on the journey of becoming an expert or a pro trader.
With the advent of social trading, traders can interact with other traders, learn their strategies and also copy or mirror their trades.
Technically, social trading can be well classified as a legit social networking service, and rightly so. Now with all these things that look good or that seem right about social trading. Is social trading then a scam?
Social trading is not a scam. But due to the nature of its setup and its mode of operation on the Internet, some reasons have made certain individuals see it has scammed.
Even though social trading is legit; meaning not a scam by intent. One of such reasons that have attracted the question of being a scam to social trading over the years is the fact that it does not have a business model that might make us want to call it a ‘concrete’ business neither does it have a business model that may be easily understood by the average person.
The reason social trading has attracted the debate of being a scam over the years is that there are now fraudulent websites and brokers on the Internet.
Over the years of social trading being introduced on the Internet, there has been situations and stories of individuals being swindled off their monies to fraudulent websites and brokers who have pretended to be genuine websites and brokers and have been able to use the social trading shade as a means to scam people.
But despite the fraudulent practices of websites and brokers on the Internet have swindled people of their monies. There are reputable online brokers and websites like eToro, Stockwits and Peeptrade that are well famous on the internet as legit social trading platforms and websites. These websites have good reviews that have added remarkable positivity to social trading and the opinions of many about it.
To balance things, some businesses are not in any way similar to social trading with the chances of being scammed. There are individuals as reported and made allegations of getting scammed from businesses and investments that are not in any way related to social trading. But one thing that has increased the potential or the chances of getting scammed in social trading is that it is largely operated on the Internet and this implies most of the time that there is usually no physical contact between social trading websites, brokers, and their traders.
Nevertheless, they’re good reports and testimonies of people who have made good profits from social trading investments on different platforms most especially on the websites mentioned earlier.
So social trading is not a scam by default. But while one gets involved in it there’s a great need to be conscious and be careful also to be discerning and to make adequate research in order to ascertain if the website or broker is regulated or trustworthy as most always claim.
There’s been a lot positive and good testimonies about social trading and there have also been a lot of not so good report which has made many call it a scam, the good reports are from people who most likely registered and used a reliable broker or website, did some mirror or copy trading of expert traders and made in turn made profits on their investments.
The not-so-good reports are most likely from individuals who either trade with fraudulent websites or brokers and in turn lost their investments. The other set of people who might want to give social trading negative reviews such as terming it a scam are the set of people who might not necessarily register with foreign brokers but dived into the oceans of trading when the tide was not going the expected or predicted way. And then lose their investment due to the nature of the market when they entered into the occasionally turbulent waters of trading especially for the newbies.
In a nutshell, social trading is originally meant to give investors the chance to use generated financial pieces of information, strategies, and techniques to make profitable trades in the forex market. It is using experienced or expert traders’ intellectual properties (we can even say abilities) for financial gain. So definitely not a scam but has been exposed to possible activities that are outright scam or very similar to scam because of its setup and because there are all sorts of people on the Internet.