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To succeed in trading, you need to be on alert 24/7, following market news, updating your knowledge, and tracking for info that will change the market momentum. Even seasoned traders find it difficult to keep up with the changing market scenario. For a newbie, this is even more of an uphill task. Social trading is one effective way you can conquer the markets without having prior knowledge or experience. It can provide important benefits such as
- Makes the learning curve easier to achieve
- Provides reliable info
- You can earn while you learn the ropes
- Helps grow a social trading network
- Gives deeper insight into the market
No wonder the format has gained popularity in recent times. Let us look at this trading method in detail and analyze the top platforms available now.
Best social trading platforms
1. TechBerry
As one of the top social trading platforms, TechBerry offers an average of 11.2% gain each month. Subscribers can begin with as low as $5000 and get a loss reimbursement of up to 100%. The service maintains superb customer support with the help of a personal manager that answers all inquiries with swiftness.
Main features
- Multiple brokers regulated by FCA, ASIC, and CySEC
- Average 11.2% each month
- Loss reimbursement of up to 100%
- Quick account setup
- Plan configurator to help calculate profits
- Real-time trade monitoring
Upsides
- Low service fee
- Access to a personal manager
- A free trial is available
- Multiple subscription plans
Downsides
- A high minimum deposit of $5000
- Little details on the strategy
Reputation
TechBerry is the leading platform in offering social trading services. It has offices worldwide and has access to over 100k accounts to generate a high win strategy.
Verdict for TechBerry
TechBerry offers traders of all levels to benefit from the market movements. There are no restrictions on any country, and your capital is risk-free with the help of loss reimbursement. To check out the service, it is possible to check it out beforehand via a free trial.
2. eToro
As one of the best social trading platforms, eToro offers diversified features. Founded in 2007, the company is a fintech firm providing a wide variety of tradable assets. The interface is user-friendly with easy navigation features. This is a free platform, but you need to register for an account to start using the service.
Main features
- Regulated by FCA, ASIC, and CySEC
- The minimum deposit ranges from $10 to $10,000
- Free stock and ETF trading
- Quick and hassle-free account setup
- The withdrawal fee is $5
- Demo account, tutorial, and educational videos are present
Upsides
- One-click copy trading feature
- No commission fee on the trades
- Well-regulated platform
- Plenty of educational resources
- The demo account is present
Downsides
- It is not accessible in many countries
- A limited number of ETFs and crypto coins
Reputation
The company is hailed as a pioneer in the social trading platform. It has FCA, ASIC, and CySEC licenses, which makes it a safe platform for users.
Verdict for eToro
The absence of commission fees, robust social trading features, user-friendly interface, plenty of educational tools, and seamless account opening and trading are key benefits of this platform. For newbie traders looking for a social trading service, this is a good choice with its zero commission, demo accounts, and educational tools.
3. NAGA
Naga provides a wide array of assets, including indices, crypto, stocks, ETFs, and Forex. It boasts a proprietary platform called Autocopy that allows users to search for top-tier traders and copy their trades. For experienced traders, the service provides a flat fee of $0.50 for every copied trade.
Main features
- Free account setup completed in a few minutes
- Trade with real-time execution using professional tools
- Free personal account manager
- Copy trades of top traders with successful strategies
- Advanced charts, instant price alerts, and professional trading tools
- User-friendly interface
- More than 950 trading assets
- Compatible with desktop and phone via web app or MT4/MT5
Upsides
- More than 950 assets present
- Advanced social traders tools
- A mobile app is well-designed
Downsides
- Flat fee for copy trading
- High minimum deposit fees
Reputation
The company is a fintech group authorized and regulated by the CySEC and is compliant with MiFID II. It is listed on the Frankfurt Stock Exchange, which proves that all its operations are transparent. It is supported by Fosun, a billion-dollar asset fund.
Verdict for NAGA
A large number of available assets, a proprietary platform, regulation, compatibility with MT4/MT5, and an effective social trading app are some of the major benefits of this service. However, the expensive minimum deposit and access to just one default account are downsides of this service.
4. ZuluTrade
For newbie traders, this platform is an ideal choice with its strong social trading features. Instead of offering proprietary brokerage, it partners with many popular brokers. You can choose traders by using a search filter based on top-rated traders.
Main features
- The Automator feature enables users to create rules and automate their trading.
- ZuluGuard safeguards user portfolios from unexpected market movements by automatically disabling the signal-providing features.
- A simulator helps to know about past performance.
- Traders combos enable diversification and reduction of risk in portfolios
- Social charts allow sharing of ideas and provide analytics
- Multilingual support is available via phone, live chat, and email
Upsides
- Diverse social traders’ tools
- Partners with more than 35 brokers offering a wide range of strategies
- Good portfolio management features
- Well-regulated platform
Downsides
- Beginner traders may find the money management process complicated
- A limited number of assets
Reputation
The company is based in Greece and has been a licensed portfolio management company in the EU since 2015. It partners with more than 64 global brokerages. It is regulated by the HCMC and is registered with the Kano Financial Bureau in Japan and Commodity Futures Trading Commission as an IB and commodity advisor.
Verdict for ZuluTrade
The social trading format is designed well in this platform. While the company does not offer brokerage services, it provides robust features that ensure a good trading experience for beginners. Other than the limited assets and complicated money management process, the service has many favorable aspects that can appeal to traders.
5. AvaTrade
AvaTrade offers CFD and FX broker services. The company was established in 2006 and is regulated by the Central Bank of Ireland and other financial authorities.
Main features
- Simple and quick account opening
- Free withdrawal and deposit options
- User-friendly trading platform
- Demo account, tutorials, and educational videos
Upsides
- Proprietary web platform
- Wide range of FX options and CFDs
- Offers AvaSocial, ZuluTrade, and DupliTrade for social trading
Downsides
- Limited range of research tools
- Expensive pricing
Reputation
The company is regulated by many authorities, such as the Central Bank of Ireland and the ASIC, making it a safe platform. It has been offering its services since 2006.
Verdict for AvaTrade
Easy account opening, a user-friendly platform, a diverse range of research and educational tools, a demo account, and free withdrawal and deposit options are the benefits of the platform. However, the service has a very limited range of assets, and an inactivity fee is charged.
6. Pepperstone
Launched in 2010, the Pepperstone Group is a top-tier brokerage offering a full-featured service that covers shares, Forex, indices, commodities, metals, and crypto. It does not accept traders from the United States.
Main features
- Free deposit and withdrawal
- Quick account opening
- Customizable interface
- Allows trading of Forex, commodities, stock, cryptos, and shares
- Allows access to trading strategies based on market reports and technical tools
- Demo account, educational videos, and tutorials
Upsides
- Low Forex spread
- Well-regulated platform
- A diverse range of features
Downsides
- It does not accept US clients
- No guaranteed stop-loss orders
Reputation
The brokerage is regulated by the FCA, which is a reputed government-backed agency. The regulation ensures traders need not worry about the safety of their funds. Further, the company holds all client funds in Tier 1 banks.
Verdict for Pepperstone
With low-cost offerings, diverse account types, good support, and a user-friendly interface, the service provides uncomplicated market access to traders.
Social trading: Definition and meaning
The term refers to the phenomenon where traders interact with their peers while making trading decisions. It has some elements of social media combined with real-time trading. The method encompasses several forms, such as the ones below.
- Interact with one another, sharing their concepts
- Use of social platforms for discussing strategies and their trades
- Leverage the knowledge of other traders and learn in a social trading environment
- Copy the portfolios or trades of other traders
What a social trading platform does
A social trading platform is a service that offers social trading to its users by providing access to the ideas and strategies of experienced investors. Newbies can benefit from
- The mentorship of such traders, analyze their approaches, view info such as equity research ratings, performance reports, etc.
- Learn profitable trading methods, strategies, and practices shortening their learning curve
Social trading apps help in the exchange of valuable ideas and serve as a robust tool for
- Networking
- Developing professional relationships
- Shadowing
Most often, the platforms work as brokerage services from which you can purchase CFDs, ETFs, and other instruments. They allow social trading participation via discussion boards, forums, etc.
Are social trading platforms regulated?
One of the criteria that traders use to choose a social trading platform is to find if it is regulated. Some of the popular regulatory bodies that ensure such platforms follow the proper rules and regulations are
- CySEC
- FCA
- ASIC
You need to verify whether a service is regulated or not before using it. You can do this by checking the registries of the brokers. This step prevents you from being deceived by a scam broker.
What is the difference between social trading and copy trading?
While social and copy trading may seem similar, they differ in many aspects. Let us see the main ways they concur and differ.
Social trading is a method that comprises copy trading as part of its structure. While you can consider copy trading as a form of social trading, it is not, so vice versa. Because in the latter, you do not allow others to manage your trades on autopilot. The format involves the use of information from your peers and making your decisions based on the information. In short, with social trading, you have full control over your trading decisions.
In copy trading, you link your account to that of your peer. Whatever executions are done by the trader will reflect in your account. So, if the trader profits, you also make profits, and if he loses, you also stand to lose. In other words, the process is automated, and you do not have control over the trade executions once you link your account.
With social trading, while you retain control of your trades and portfolio, you stand the risk of losing trade because of your lack of experience.
In the case of copy trading, you need to just copy the trades, which is done automatically. You will not have the hassle of deciding on the trades. While this is good if the trader you copy is successful, it can backfire if the trader is not successful. Another drawback is that you do not have the opportunity to learn the process at all.
What assets can you trade on social trading platforms?
You can trade a variety of assets on the platforms. Most of the popular platforms have multiple assets to choose from. The commonly traded assets that are made available to users are:
- Stocks
- Forex
- Commodities
- Indices
- Cryptocurrencies
- CFDs
Are social trading platforms safe for newbies?
A service is considered safe to use for a beginner when it satisfies certain criteria like
- Regulation: Regulation by reputed organizations such as CySEC, FCA, etc. ensures the service is well-regulated.
- Reputation: Choose a service with a good reputation which you can verify from the user reviews, the licensing details, and company background.
- Ease of use: For newbies, a user-friendly interface is a must for a seamless experience regardless of how easy the format is otherwise.
There is always the risk of copying or following a professional who is not profitable anymore. When you choose reputed platforms, they limit the risk by trading only a small percentage of your total account to each trade or setting aside a specific amount for a particular user.
How much do you need to copy a social trader?
Most popular platforms allow users to use the platform for free. Users need to just create an account and start manually copying other traders. Or they can use the service to connect and interact with other traders. A mirror service, however, requires a specific fee to be paid for the automatic copying software you use. The platforms earn commission from the sell/buy spread of the executed trade.
How to become a trader in a social trading network?
Here are the steps to get started:
- Choose a reputed broker or platform that provides all the features and functionality you need to successfully use it
- Select the traders you want to copy and learn from and conduct research on the markets they work on, their strategies, risk parameters, etc.
- Choose the money you need to allocate to each trader. Generally, it is wise to allocate less money to those using high-risk approaches than the traders using low-risk strategies.
Is it possible to make good money from social trading?
With social trading, you use the expertise of seasoned traders, which increases the probability of success. However, with trading, there is no guarantee of success all the time. For beginners, a platform serves two main purposes, namely learning how experienced traders work and profit from their expertise simultaneously. For experienced traders, the platforms provide a good earning opportunity as the traders can allow their trades to be copied for a certain fee.
Main risks of social trading platform
You gain several advantages with social trading, but there are some risks that you should be aware of:
- As a trader with little or no experience, you assume a high risk of relying on the opinion of your peers.
- The key attraction of the format is the opportunity to earn big with very little knowledge and investment. If you fail to set realistic expectations, you can be devastated by the potential losses as trading is always associated with risk.
- Many traders make the mistake of using just a single trader instead of spreading the investment over multiple traders.
- Poor risk management, such as not limiting the maximum amount you invest, can result in big losses.
How to avoid these risks?
Fortunately, you can avoid many of the risks in social trading. Here are a few of the ways.
- You need to set realistic expectations on the returns you can generate and be aware of the risk of failure even with the backing of experienced traders.
- Diversify the amount you invest in multiple traders, which will help in minimizing the risk
- Restrict the maximum funds you invest in each of the traders to reduce the losses
Pros and cons of social trading
Pros
- You get access to a huge amount of reliable information
- You can be part of the trader community and enjoy the support of the members
- Minimize the costs involved in gaining the required expertise
- Use different strategies and reduce the risk of losses
- Learn the skill of managing the risks associated with trading
Cons
- Following a professional trader may not always end in gains for you. If the trader is on a losing streak, you stand to lose a big chunk of your funds.
- With the backing of expert traders, you may become overconfident about the success of the trades.
- The elements used by the trader you copy from may be different from what you are trading. For instance, the trader may have a diversified portfolio that includes high-risk and high return methods, and their capital may not be anywhere near what you intend to invest in as a newbie. So, you may have to implement a proper risk management method based on your capital and diversify your investment.
Summary
For beginners, social trading platforms offer a big advantage. They allow traders to leverage the experience of seasoned traders. For experienced traders, the platforms allow them to earn income by sharing their strategies and trades. Further, you can keep track of your performance and grow your portfolio efficiently. Our list of the best social trading platforms will help you choose a suitable platform that meets your needs.
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