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Visit AvaTrade76% of retail investor accounts lose money
Visit Vantage74-89% of retail CFD accounts lose money
Visit IC Markets74-89% of retail CFD accounts lose money
Visit Pepperstone74-89% of retail investor accounts lose money when trading CFDs
Visit Axiory(Your capital is at risk)
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Social trading platforms are online platforms that allow all traders to share ideas, see the statistics of other traders, trade on their own, or choose to follow other traders.
In short, social trading platforms are like social networks, but dedicated to traders and trading activity.
The history of these platforms began around the early 2000s, where traders would gather in forums and discuss financial markets and their respective trading strategies.
Social trading platforms as we know them today were born in 2010 thanks to eToro, which was the first broker to implement a social section within its trading platform.
To date eToro is the best social trading platform in the world, but over time many other alternatives to eToro have sprung up that offer similar services.
In this article we have reviewed some of the best social trading networks.
Several factors were taken into consideration while creating this list:
- Name of the social platform
- Top features of the social platform
- Minimum deposit requested
- Number of assets provided
- If Demo accounts could be opened
- Top features of the broker
|Social trading platform
|Copy trading available
|AvaSocial and ZuluTrade
|DupliTrade and ZuluTrade
|Axiory Copytrading App
What are the best social trading platforms?
Below our curated list of the best social trading platforms and networks, with details of features and characteristics.
How to choose a social trading platform
Choosing a social trading platform should involve careful consideration of a number of key factors.
- It is crucial to select a platform that is regulated by esteemed authorities like the Financial Conduct Authority (FCA) or the Australian Securities and Investments Commission (ASIC). This ensures that the platform adheres to strict standards of operation, security, and transparency.
- Make sure the platform charges minimal fees for copy trading. Typically though, these platforms do not impose additional fees on trade open-close, and users are only required to pay the bid-ask spread.
- A superior social trading platform will provide detailed information about traders’ performance and portfolio allocation, allowing you to gauge the riskiness of their strategy. Moreover, it should also feature a dedicated feed section, much like a social network, where news, comments, and shared opinions are accessible.
How do social trading platforms work?
Social trading platforms primarily allow traders to interact with each other as in a social network, and secondarily allow them to both invest independently and copy the activities of other traders on the platform.
In fact, although “social trading” originated primarily to allow traders to discuss the market with each other, to date many social trading platforms also implement copy trading or mirror trading within their service.
This makes social trading platforms very flexible, as more experienced traders can trade independently and earn commissions if some user copies their trades, while less experienced traders can copy experienced traders so as to have similar performance to an experienced trader.
Social Trading vs Copy Trading vs Mirror Trading
The difference is that social trading platforms focus on getting traders to interact with each other, while copy trading and mirror trading platforms focus on providing the ability to copy other traders and/or trading strategies.
Copy trading platforms offer, in fact, a form of automated trading. It allows traders to copy the trades of other traders. This can be similar to what is offered with social trading but without the same levels of social interaction.
Mirror trading, on the other hand, is essentially copying exact positions based on algorithmic trading strategies which have been coded to behave in a certain way. This means you follow the strategy exactly, with the same opening and closing times, in a fully automated environment that provides forex signals.
How to get the most out of social trading platforms
Social trading can be a highly beneficial practice if leveraged appropriately:
- Prioritize following traders who have demonstrated experience and stability. Their insights and ideas can be invaluable, but always remember to conduct your own research before making any investment decisions.
- While advice from other traders can be helpful, it is important to not open any position without performing your own due diligence. If an investment seems too good to be true, it likely is.
- While a near-perfect order success rate might seem enticing, it often indicates the trader is following risky trading techniques such as the martingale strategy. It’s important to understand that occasional losses are a part of trading, and copying the strategy of these traders may backfire.
To gain a deeper understanding of copy trading, we recommend checking out our detailed guide for more insights about this trading strategy.
Risks of social trading
A key risk is the possibility of being influenced by a poor-performing or inexperienced trader.
It’s easy to get caught up in the excitement of seemingly lucrative strategies, especially if they’re presented with confidence and enthusiasm. However, keep in mind that not all that glitters is gold. Overzealous traders might make grand claims that can’t be substantiated, and blindly following such advice can lead to significant losses.
Remember, the primary benefit of social trading is the sharing of knowledge and ideas. It’s a platform that allows you to learn from others’ experiences, gain insights from diverse perspectives, and tap into collective wisdom. Nevertheless, it doesn’t eliminate the need for due diligence.
Before you decide to follow a trader or implement a strategy, it’s crucial to validate the information independently. Do your own research, understand the risks associated, and make informed decisions based on your own analysis as well as the shared knowledge.
Are there alternatives to the social trading platform?
On the market there are some social trading platforms that do not offer trading services. These are:
- Kinfo Social Trading: To share your portfolio and performances with other traders
- Myfxbook AutoTrade: offers a comprehensive range of analytical tools for your forex trading account to help track your metrics and performance.
- FX Junction: allows you to easily connect your trading account and analyze your performance against others in the community and copy them if you wish to do so.
- MQL Forum: forum of traders who use the MetaTrader platform
- FxStat: follow news from the traders, markets, and see their portfolios.
Pros and cons
Here then, is a look at some of the pros and cons of social trading we have found:
- Social trading allows you to have contact with some of the best and most successful traders in the industry.
- You can benefit from some professional market insights from many other traders.
- This can be a great way to learn and quickly develop your skills as a trader.
- There is always a chance of being easily influenced, particularly for newer traders.
- The fact that even non-experts can share their thoughts means you must always conduct your own research on any information too.
Our final thoughts about social trading
Overall, social trading is a hugely popular segment within the industry, and whether you are trading on some of the best social trading platforms out there, or you are engaged with any social trading software, it can be a very useful system for all traders.
Social trading can be a great way to share knowledge with top-class expert traders, and can really help you to gain great market insights, particularly as a newer trader.
The only caveat is that you take care to research all of the information you come across, and not to jump into any risky investments no matter how well they may be promoted, or how safe they may seem. With these ground rules in place, using a social trading platform and broker can be a great experience for both retail investors and signal providers.
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