Understanding How Social Trading Works

GameStop’s unprecedented spike in the first quarter of 2021 is an example of social trading in action. Investors poured money into the stock because of chatter about the company that started on Reddit. Investors from the r/WallStreetBets subreddit led a surge in buying interest, which eventually resulted in a short squeeze of GameStop stock. Fees, minimum deposit requirements, withdrawal, account opening, research tools and more. We use over 50,000 data points and a consistent, fact-based methodology.

what is social trading

The practice ranges from traders discussing trades and strategies on social platforms or forums to copying the trades of other traders. The term “social trading” is also used to cover copy trading and mirror trading activities since traders copy and mirror what other traders do. Social Trading platforms allow you to learn from experienced investors, where you get to know how to navigate the trading market and still earn some money by copying their trades. Therefore you don’t have to wait until you have all the required knowledge for you to start earning. These accounts refer to accounts in the social trading atmosphere that are the ones opting to copy other investors and traders movements in the markets. In a ‘copy’ account, you’re not doing any actual trading, simply copying other movements within the markets.

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If you’re looking for additional reading to supplement your forex trading education, you’ve come to the right place! Below we list just a handful of must-read forex trading books that we think are… Forex trading is the simultaneous buying of one currency and selling another.

Due to the flexibility and control, the model is a natural successor to traditional investment strategies. If you’re still hesitant, try a demo account to get an idea of the endless possibilities that crypto social trading platforms can offer. Of course, these aren’t the only types of service models used by crypto social trading platforms. You’ll find all sorts of systems in the market, including performance-based and profit-sharing models.

Each have their own traits and distinctive qualities; some offer incentives such as bonuses and discounts to be the one that is copied, while others do not. Social trading is a concept; it involves using other traders and investors and their decisions as a base model in making decisions in your own investing or trading techniques. As a result, it is more of a mindset, which can be translated into a process for both new and veteran traders and investors. With Collective2, you choose subscription levels based on how many strategies you want access to each month. If you want access to unlimited trading strategies, you might have to pay up to $299 per month. When you consider your situation, make sure you understand how paying a trading fee can cut into your overall profits.

Daly Young has led many projects throughout his career that allowed him to gain a wealth of experience and knowledge about the finance and technology sectors. Daly pursued and completed his bachelor’s degree in communication engineering at Shanghai Jiao Tong University — one of the top five prestigious universities in China. Right after, Young kick-started his career journey with Tencent, one of China’s top tech conglomerate giants, and was employed as the product manager for five years. He later moved on to Futu Securities International Limited, a fintech company ranked among Asia’s top online brokerages.

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Additionally, some social trading platforms don’t have the proper licenses to operate in the U.S. A social trading platform is a social network designed for traders. Instead of posting selfies, participants share their latest trades and strategies. It’s possible for you to pay attention to what someone else is doing, follow traders that have similar philosophies to you, and learn from them. Public was founded in 2019 after a rebrand from the former title Matador.

There are no management costs or extra hidden charges of using the CopyTrader, so all users can try it out. However you do it, though, you use what you’ve learned in your own terminal. So, if you buy a system, you can then run it from your own MetaTrader dashboard. You can also find what is social trading a virtual server to be constantly copying a trader’s moves and signals, without having to run it on your own. This strategy, using the MQL5 website, is a little different when it comes to social trading. You’ll need to be set up with the MetaTrader platform, using either MT4 or MT5.

  • Some strategies may only be effective in trending or flat markets.
  • PrimeXBT is a margin trading platform that lets traders go long and short on forex, crypto, commodities, stock indices, metals and more.
  • This type of investing is primarily geared to the younger generation, who are just getting involved in the stock market.
  • The difference between them is that while for the first one lots are traded for $100,000 each, for the second one they are traded for $10,000.
  • A person intending to become an expert must show consistent and profitable trading performance.

As professional money managers we required a platform to manage our trading accounts and risk effectively. Social Trader Tools has given us the tools to allow us to focus on our core business. Followers must make sure those they follow continue to bring profits, and aren’t on a sudden losing streak. Copy trading lets traders diversify across many different strategies, as a risk management strategy.

Copy Trading

Here, you’ll find a range of Editor’s Choice traders, trending investors, and you can search and filter to find more traders. If you’re a high performing trader at NAGA, you can get paid bonuses when your trades are copied. Traders have user profile pages that summarizes their activity, and you can even set trading objectives and achievement goals to give you something to aim for. You can also use the search and filter tool to find traders that deal in your area of interest.

what is social trading

In short, a social trading platform increases the opportunities of making money and learning to trade in the field. Always remain critical of the strategies and traders that you are copying. Have you ever felt like the barrier to entry to trading was simply far too high for you to breach? Retail trading can often feel like a zero-sum game, one in which your loss is often someone else’s gain.

The major drawback is the limited number of cryptocurrencies that you can trade. At the time of writing, there are only 13 cryptocurrencies offered. Using social media in different forms has grown to all financial service providers.


Market participation in the pandemic is growing as people with more time at home, and savings from stimulus checks, look to cash in on wealth-creation opportunities. Yes, copy trading is legal in most countries, provided that the broker itself is properly regulated. When investing in the financial markets using a regulated-broker and legalizes your account and the traders carried within them. However, all of these completely depend on your country that you are living in.

what is social trading

Because this is a common platform, there’s a chance your broker might use this. While not exactly a social network in the way eToro and ZuluTrade are, Tradency still uses aspects of sharing to allow you to copy trades made by others. Using algorithms, Tradencys Mirror Trader https://xcritical.com/ generates strategies based on how professionals are making moves all over the world. The systems created must meet various regulatory requirements in the United States, so there are fewer systems available to U.S.-based traders than to those located outside the country.

These are funds that turn capital over to specific traders who then act as portfolio managers. This is a bit like a funds investment, but instead of investing in hedge funds, one is investing a pool of capital into a fund that copies multiple traders. This provides diversity in copy trading and allows returns to be uncorrelated. Traders can perform this on their own, but it’s imperative for traders to ensure that they are not putting all their eggs in the same strategy basket. Never allow yourself to believe that engaging in social trading means that you are safe from risk.

How Does Crypto Social Trading Work?

Last but not least, systematic market risk is a major one that can negatively impact your trades. Systematic risk is inherent to the entire market, which means it can’t be reduced through diversification. Founded by two brothers, the platform hosts more than 9 million monthly transactions estimated at $2 billion. This website is not oriented in any jurisdiction and is not intended for any use that would be contrary to local law or regulation of its users. It is the responsibility of the Client to ascertain whether he/she is permitted to use the services of the tixee brand based on the legal requirements in his/her country of residence. Social trading tools are now available not only on desktop, but also on iPhone, Android and iPad mobile devices.

It’s like the difference between chatting up the person next to you in history class to start a study group versus just copying off their exam paper on test day. Implementing a social trading strategy may be as simple as clicking a button to mirror another investor’s entire portfolio. Your portfolio would then reflect the same type of trading activity.

Social Trading: New Age Investing Explained

On social trading platforms (e.g. eToro, ZuluTrade, Naga Trader), individuals can join their peers’ trading strategies and copy every single action the trader enacts in real time. In return for providing trading signals to users, traders are compensated with fees. Imagine an experienced trader and a beginner trader sharing a desk, they sit next to each other.

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You can see market sentiment, based on the trades made by members, and you can also see the top performers and the amounts in their portfolios. You can also join as an investor, where you can select different strategies to copy and build your portfolio based on what’s been successful for others. Just like any other investment, you can also make money or lose money from copy trading. The idea behind copy trading is to assess each trader’s profitability before selecting which signal provider you want to follow. This has helped the practice of copy trading to quickly become popular. As more new traders join in with copy trading, they gain more practice and become better traders.

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At that point, some smart individuals saw a new way for people to interact — sharing statuses, photos, events, videos, and so on. That was the start of social networks like Facebook, Instagram, Twitter, LinkedIn, and many more. While one can set up an algorithmic trading​​ mechanism, it is considered unwise to leave money unattended.

Social trading can be described as those activities that engage or facilitate interactions among traders to strengthen the crypto community. On the other hand, copy trading is an element of social trading that allows users to mimic the trading patterns of other traders, in particular, experienced or professional traders. The biggest difference between social trading and copy trading, is that with copy trading, another trader actually does the work for the follower.