In former days trading was dependent on the locations of customers, brokers and exchanges. Then the internet came along and made way for the online trading phenomenon. The advent of Web 2.0, Facebook and Twitter gave rise social trading. It is also the latest revolution of day trading.
In the same way that social media connects people from all over the world, social trading allows one trader to copy the trades of more successful trades from around the world or to folow their trading signals.
It has a number of advantages. Firstly, it allows for the free flow of information between individual investors. Knowledge is power. It also allows a kind of Cooperative trading. Individuals can work together, pool funds, share their knowledge and divide research among themselves to achieve a common goal.
In essence, it is the process through which one trader relies on another for information to make a trading decision. The collective wisdom of a thousand is better than one. It is a network from all over the world allowing people to share knowledge, views and trades.
Social trading carries a risk of capital loss.