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Whether you’re new to the world of trading or just interested in generating some extra income from the online markets, social trading can help you. We understand that social trading may not be every trader’s preference, so we decided to create this guide along with a review of the top social trading platforms in 2021. Getting started with them is quick and easy.
Continue reading our guide for more information.
What is Social Trading?
Social trading can be best described as copying the trades of expert traders. This does not only include copy trader, where only a single trade is copied, but mirror trading too where the less experienced trader copies the exact trading strategy as the more experienced trader. Social trading is not a new concept, in fact it’s been around for quite some time. There are now tons of trading platforms offering facilitated social or copy trading to potential investments. It is important to note that social trading is not for everyone.
Social trading is ideal for new beginners since it allows you insight into basic and complex strategies, helps you figure out the trading landscape and you get a feel for what works and what doesn’t. Social trading also allows you to learn trading tactics and best practices to use on your platform. There is simply no better way to learn than from the experts.
What you will basically be doing is using other traders and investors and their decisions as a base model for making decisions on your own trading techniques or investment strategy. You can either replicate an expert’s strategy and make it your own or use the experts techniques to inspire your own trading strategy.
Social trading is not complicated at all. You are simply looking at one trade completed by user x, and using that information to influence your own trading decision. Some people prefer to use the term copy trading instead.
The Benefits of Copy Trading
Many new beginners are unaware of the benefits that social/copy trading can yield. We’ll list some of the benefits for new and experienced traders below:
1. Valuable Insight
Being able to see how other traders have made decisions based on the markets will provide you with a greater understanding of assets and prices. You may be wondering how you will receive these insights? Social trading allows this by showing you where, when, how and why a trader decided to implement something. This is very important, and if applied correctly, will give you a competitive edge.
2. Market Sentiments
Social trading will give you perspective when it comes to the market. You will be able to see how many people are buying or selling certain assets and which is consistently profitable or declining.
3. Intelligence and Automation
It is important to note that research plays a big role in making certain trading decisions. Analysts and Mathematicians spend weeks on end gathering and analysing data. Deciding on social trading means that you are following reliable traders and you decisions are based on research and those who have already tested the trades.
4. A Source of Learning
Both new and experienced traders must always ensure that they continue learning and expand their knowledge, especially when it comes to trading the markets. For those traders interested in the cryptocurrency market, learning is particularly important, since the cryptocurrency market is extremely volatile and changes from day to day.
Advantages and Disadvantages of Social Trading
As with any trade or investment, there is a level of risk. We decided to put it all out there and make sure you understand what you’re getting into when deciding on social trading.
| Advantages | Disadvantages |
| ✔️ It’s a fairly easy way for a beginner to start out, since social trading essentially copies the trades of a more experienced trader. You do not have to worry about having extensive knowledge before starting. You can learn as you go along. | ❌ Just because you are copying trades from experienced traders does not mean that those traders don’t make mistakes. Every trader can make mistakes. This is why you should make sure you check the end result of trades too. |
| ✔️ Social trading allows you to talk to other people. It is possible for you to interact with other traders and pool your collective knowledge together for the benefit of all of you. | ❌ You may find it difficult to find a trader that matches your exact goals or capital injection. |
| ✔️ It requires a very low investment. Copying trades from a more experienced trader means you don’t need to spend as much time studying the markets. | ❌ Because social trading is relatively low-risk, you don’t gain much first-hand experience. |
How Do I Choose a Social Trading Platform?
As we now know, social trading is the process of utilizing a platform where the application or website allows you to copy experts’ trades. The process of social trading and copy trading is different on each platform, also important to note that not all platforms have this feature. All trading platforms have their own traits and distinction, some even offer bonuses and incentives.
Here are Some of the Best Social Trading Platforms in 2021
1. eToro Trading Platform
eToro is a well-known fintech social trading broker. The company was established in 2007 and is based in Israel. It is reported that eToro is one of the world’s largest social trading and investment companies in the world. eToro has millions of clients in over 140 countries. Initially, eToro was a graphic-intensive forex platform, which has now integrated tools for crypto trading. Clients who are not in the US can trade additional asset classes such as CFDs and stocks on a variety of exchanges The platform is a breeze for investors who have a basic understanding of cryptocurrency trading
Key Feature of eToro
- User-friendly interface.
- Non-US clients can trade cryptocurrencies
- No explicit commissions charged.
- Traders can follow and copy the trades of other profitable traders.
2. Trade 360 Trading Platform
Basically, Trade360 capitalizes on cognitive research, which explores the possibility that a crowd will make better choices than individual professionals. It has been reported that Trade360 appeals to millennial traders who prefer a social approach to trading. The broker uses CrowdTrading technology and the MetaTrader 5 platform, which is popular among brokers all over the world and it appears that traders feel more comfortable trading on these platforms.
Key Features of Trade 360
- Trading Central is considered to be one of the leaders in independent market research and one of the most significant assets of Trade360
- Traders can rest assured that they have sound market coverage and access to valuable assets on Trade360. Traders also have access to daily market reports which can be useful, when making trading decisions on the platform.
- There is a mobile application available for all traders. It is accessible to iOS and Android users.
- Live quotes are available for tradable assets.
- Trade360 has innovative CrowdTrading Technology that is fully featured.
- Switch between demo and real accounts with one tap.
- Deposit funds, request withdrawal and view account history.
- Place orders using multiple orders or modify and close orders.
- Price alerts can be set for favorite assets.
- Up to eight chart styles are displayable on ten time frames.
- Over 100 technical indicators.