Cryptocurrency investment is a term that can have expert eyes lighting up and newcomer brains fried. For those already within the cryptocurrency industry, talk of investment improvements is one that is consistently ongoing, with new innovations, priorities and demands consistently shaking up the discussion, but none has done this more than social platforms. While investment hasn’t been a ‘solo’ act, exactly, partaking in a social trade isn’t something that many investors, especially those of cryptocurrencies, will have much experience in doing. However, with leading platforms taking this on, could social platforms be the way forward in cryptocurrency investment? Read on to find out.
What Is Social Trading?
While social trading is technically nothing new, the rise of online and Internet-based trading have given this term a much more technology-based meaning. Essentially, social trading is the act of following the trading activity of another trader and usually copying what they do if there are enough trust and belief in their chosen action. Through online social trading platforms, giving and receiving feedback and mimicking the exact actions of another trader who may have more expertise is made extremely simple. Considering that trading is often based off of trends and market movement, traders could opt for following influencer activity as opposed to utilising indicators or trend analysis themselves.
Mob Psychology
Crowd psychology, often referred to as mob psychology, is a study within psychological science that looks at why individuals tend to follow the actions of a crowd as opposed to opting for their own ‘path’. Through the rise of social platforms within trading, we are already seeing this kind of behaviour in investors, clearly shown in the crash of the credit bubble in 2008that saw millions of investors in competitive markets following each other a little too closely in an attempt to take advantage of trends – until it crashed. Given the volatility of cryptocurrencies, the debate as to whether this is necessarily a good mentality to have is widely up for debate.
The Power Of Influencers
Similarly to mob psychology, the control that influencers have over the markets is also something worth watching. Within social trading, investors tend to follow the actions of those with more experience or a higher level of understanding that they do and while this makes perfect sense, it drums up another debate as to whether this is necessarily a good thing. However, for new traders just starting out and looking for the best ways to invest or when considered alongside careful analysis, social trading could prove beneficial to the market overall. Social media is an undeniably useful way of learning how any particular industry is leaning and through following the actions of an influencer quickly, traders could make much more valuable decisions.
Could This Be The Way Forward?
Whether social trading is the way forward is undoubtedly a topic up for debate, but one thing is for certain: it’s a valuable and fun way to get trading. Through careful and well-formed feedback and a touch of common sense, following the influence of leading traders or experts in the industry can lead newcomers or those looking to step up their game to a new level within trading. Traders can become much more integrated into the markets and through careful attention to their social feeds, can even start to make better decisions about the investments that they are making.
With all of the above in mind, social trading certainly has its pros and cons but all in all, a bit of careful thinking and common sense could make this trading method highly valuable. Would you give it a try?
Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Global Coin Report and/or its affiliates, employees, writers, and subcontractors are cryptocurrency investors and from time to time may or may not have holdings in some of the coins or tokens they cover. Please conduct your own thorough research before investing in any cryptocurrency and read our full disclaimer.
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