"Social trading is about communication plus investing," - Pavel Salas, eToro
Social trading has recently become increasingly popular on financial markets. Pavel Salas, Regional Director of eToro in Russia and the CIS, will talk about how to conduct transactions in an investment social network and make a profit.
- Pavel, hello. Tell us a little about yourself. How did you get acquainted with trading on financial markets?
- Hello Julia. It all started in 2007 when a friend of mine got a job at IFC Markets in customer support. He told me about the Forex market. I got interested. At first I traded on a demo account, then I opened a real one, but soon realized that I did not have enough knowledge. Then I started going to all sorts of seminars, received training at several companies, read a lot of financial literature. Two years later, Yuri Ivanov, General Director of IFC Markets, invited me to become the company's regional director in Latin America, in Ecuador. There I worked on the development of business in the region and optimization of business processes, as well as prepared and started a school. Now I am engaged in social trading in the company eToro.
- One of the popular innovations in the field of traders is the so-called social trading. Could you tell us what it is in more detail?
- In a nutshell Social trading is about communication plus investing. Users can manage their investment portfolio, open and close positions, place trade orders, and invest in other traders' portfoliosby copying their favorite profiles at the push of a button.
They can discuss trades on their wall or the wall of another trader, see what the portfolio consists of and ask the trader why, for example, he bought certain stocks or indices. Our social network for investors currently has over 5.5 million users from 140 countries. That means you can ask any trader from Italy, Germany or China why they bought this particular instrument and why they showed such a profitability.
[info_block align=”right”]Социальный трейдинг – это возможность в один клик реализовать инвестиционную идею[/info_block]
- What does a trader need to take advantage of social trading? How profitable can it be?
- You need a computer, the Internet, and a desire to understand what financial markets are all about. Talk, read, see the experience of others, who and what they are doing. Social trading is not a deposit in the bank, where you put your money and got a fixed profit. These are, after all, financial markets that carry risks. The other thing is that social trading tries to minimize these risks - you can look at what other people are doing, ask them a question, take and copy their trades. Perhaps the key to success here is not to try to run after very large profits. If you put together a competent portfolio with minimal risk in mind, it can yield 25-30% per annum in currency with 5% of risk.
- Pavel, tell me, what are the risks in social trading?
- For example, on our platform there is such a concept as "risk level" from 1 to 10. And we have banned copying all traders who have a risk level higher than 7. Why? Because on one hand these traders can show very high yield - 300-400%% per month, but on the other hand these traders do not work more than 2-3 months. And if an ordinary person just starts working on financial markets and wants to copy such a trader, he is likely to lose his deposit.
We are trying to democratize the financial market, so anyone can make transactions, but at the same time, we understand that you can't just thoughtlessly copy the first one. We have specially introduced such a concept as Copy Stop Loss: if the user wants to copy someone, he puts a clear stop loss on possible losses of the selected trader's portfolio.
- Can everyone participate in social trading? What is necessary for the experience to be successful?
- Not everyone, but only those who are at least 18 years old. What is needed? First of all, a desire to learn and analyze. For example, when you choose a trader for copying, look at his risk level, maximum monthly and annual drawdowns, and the long-term nature of his trades in the market. If his max drawdown is 90% and he is still in profit, it means he is a risky trader, because he was waiting out the market movements and got lucky and made profit. What will happen next month - you do not know, and you have to be careful with such traders.
Always, before you choose a trader or an instrument, spend some time, study the risk, the profitability, the drawdown, and then create your portfolio.
- Would you recommend novice traders to try social trading? Why?
- I will probably say as in advertising, although it is true my opinion, as I have worked in many companies and know the market. I would recommend starting with our company. Because the very principle of social trading and our platform is to take a person step by step through complex notions, to show how you can trade, the possibility to communicate openly, to see all the statistics of any person who trades. And this way his first steps will always be much easier, clearer and simpler than with any other traditional broker or platform. I remember when I opened Metatrader 4 for the first time, not knowing what it was and I saw 4 different charts at once with analysis dollar/yen, pound/dollar, euro/dollar и доллар/франк. Я открыл, посмотрел, подумал: «Что с этим делать?», – и пошел просить друга рассказать, что это такое.
- In short, things are simpler in social trading?
- Yes. When there is a crisis in the financial markets and gold goes up, anyone can go ahead and buy gold, or when Facebook has reported well, buy its shares in a simple and intuitive interface. Here's a friend of mine recently pointed out that virtual reality and drones are gaining momentum right now, and there's a company on the market like nVidia-the company makes video cards for them. He bought their stock with the hope that it would grow, and he was right.
That is, social trading is an opportunity to implement an investment idea in one click. And plus you can always write and ask your colleagues what they think about this or that stock and get an answer.
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