There is a growing amount of retail traders who have gained confidence in their trading style, but may lack the time or expertise in certain markets. It is true that social trading requires little or no knowledge how social trading works about financial markets which can be a huge advantage given trading can be intimidating to the less experienced. Wealthface is a one-stop online investment company that services all kinds of investors.

This will show their trading performance over a set amount of time . It’s recommended to follow traders who have been successful over longer periods of time. For example, following a trader with a 25% return over twelve months is a far safer option than following a trader with a 25% return over seven days and only a month’s worth of verifiable data. This type of social trading strategy acts as guidance for new traders who want to be nudged in the right direction. The trader can look deeper into the trade tip, where they can decide whether to execute a trade or move onto the next tip. AvaTrade also offers a range of automated trading tools, such as RoboX, Mirror Trader, MQL5 Signal Service, API Trading, and Duplitrade.

Before you trade, AskTraders.

Through this interactive space, you can chat with other traders and a host of trained IG staff to advance your trading. We’re going to break it down it the simplest way, as generally speaking, it is a rather straightforward explanation. Social trading is basically a form of investing which centres around community involvement – investors both follow and observe the trade behaviours of others. New traders surely have found their style, preferred market sector and exposure, however amidst this shift in the industry, social trading has found its place as well.

One of the largest faults a social trader can make is thinking that the method eradicates risk completely. All trading involves risk, and traders are likely to make a loss at one point or another. So, the idea of trusting a third party’s judgement – while retaining all the risk of loss – is seen as a large drawback of social trading. ✅ It allows you to start trading without prior training experience and learn little by little from experienced traders, as you are getting hands-on experience. ✅ It offers the possibility of networking with other traders, being able to ask questions about all kinds of markets, doubts about techniques, discuss an event that affects investors, and so on. Social trading is expected to become a lucrative multibillion dollar market.

What are the drawbacks of social trading?

Imagine that you’re following only the most highly ranked traders on the platform and the first few trades you’ve copied have made a profit without you having to do much. Social trading is a strategic approach to trading in which investors can copy the strategies of more experienced peers. Pionex is a cryptocurrency exchange with impressive automated trading tools and bots. The material provided on this website is for information purposes only and should not be regarded as investment research or investment advice. Any opinion that may be provided on this page is a subjective point of view of the author and does not constitute a recommendation by Currency Com or its partners. We do not make any endorsements or warranty on the accuracy or completeness of the information that is provided on this page.

We also considered trading tools and weighed up foreign exchange fees on overseas shares . 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. Trading financial products carries a high risk to your capital, particularly when engaging in leveraged transactions such as CFDs. It is important to note that between 74-89% of retail investors lose money when trading CFDs. These products may not be suitable for everyone, and it is crucial that you fully comprehend the risks involved.

Social trading explained

If you don’t want to spend time learning, you can join social trading platforms. With that said, social trading platforms aren’t only for beginners who want to replicate trade ideas. Typically, a professional trader will receive a bonus every time someone copies their trade. To get started, simply create a profile on one of the top social trading platforms, allow newbies to replicate your trades, and then do your best to maximise your trading performance. Social trading enables users to share information with other members of the community in real time. As this is one of the inherent benefits of the process, it allows new investors to witness and then replicate the trades performed by veterans.

• When using a real account, keep the risk not higher than 2-5% of your total portfolio.
• Members are constantly providing information about a specific subject.
• Social traders believe this helps demystify investing, opening it up to a broader base of people who aren’t willing to pay for formal portfolio management services or access financial content.
• By understanding this part of the strategy you will develop a sharp eye for market structure and overall market discretion, allowing you to right side of the market.
• Not just last year, but you know… in the last few days or weeks.
• Social trading is based on social community communication, where traders exchange opinions and trading strategies.
• Seen as subcategories of online social networks, social traders can mix their own decision-making with other social traders looking to do the same thing.

Copy trading is suitable for those who lack the time or experience needed to research and make decisions of their own. The only requirement is to find a trader that has a strong trading history and one that aligns with what you want to achieve. Collective2 is a US-based automated trading system with over 78,000 members in their community. It doesn’t require any technical or financial background, and the service has been verified as US-friendly by FINRA. US customers can take advantage of these features too, but on a slightly more limited basis.

Security in Social Trading

In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation https://xcritical.com/ or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it.