The Difference between Social Trading and Copy Trading Explained

Well, one of the surprising things about the traders you’ll find on Social Trading networks is how diverse they are. Men, women, young, old – the sites are open to just about anybody who’s willing to put their track record under the microscope. In fact, on my favourite social trading network, the top traders must have their entire track record publicly scrutinised for at least 6 months before people can follow them. For that reason, you can rest assured that whoever they are, they DO have a reasonable degree of market experience. Unlike most private investors, Top Traders don’t trade in specific shares.

YouTube – Our company, DTTW, hosts the TraderTV, where our traders offer educational and live trading content. If may sound too good to be accurate, but it is a real chance for you to prosper. The only no-win situation is that you have to work hard to be lively in the community. If you have to select carefully who you will emulate on your following markets account.

The confluences serve as additional confirmations for trade entry and exit. NAGA has also launched its own cryptocurrency, NAGA Coin ($NGC), an Ethereum-based token. $NGC gives skilled traders the ability to monetize their trading strategy through amassing ‘copiers’.

Copy Trading Explained to Beginners

You will need a live account from an MT4 or MT5-supported broker as a potential signal provider with profitable results. The longer and more conservative your track record is, the easier it becomes to attract followers, increasing your earning potential. MetaTrader 5 (MT4/5) are two of the most popular financial market charting platforms on socialtrader tools the planet. However, the uninformed person may be forgiven for believing such software is only reserved for self-directed traders. NAGA’s Autocopy tool enables users to find leader traders and automatically mirror their trading activity. Anyone with a verified account and at least €50 ($67.40) on their balance can use the Autocopy feature.

Social trading explained

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs, FX or any of our other products work and whether you can afford to take the high risk of losing your money. Enables investors to study the trading strategies of experienced and professional traders. It is a type of trading that enables quick and easy access to financial markets, such as the foreign exchange market in which the currencies of countries are traded. It is a trading strategy in which traders are not required to rely on fundamental or technical analysis to make investment decisions.

It provides a platform for all sorts of traders who are performing trade in different financial assets. With the help of social networks traders and investors can learn the latest information and updates regarding the market sentiment. Moreover, successful and professional traders can assist others with their trading experiences. Going by this evolution, one thing is clear; the markets are here to stay. The only thing that changes are the products and trading strategies across civilizations.

Social Trading Explained: Strategies to Maximizing Returns

New traders have an opportunity to learn by following more experienced traders’ strategies. The transparency of social trading can help them compare approaches and choose their trading style with time. Social trading is a form of traders by observing the behaviour of the peers and expert traders. Social trading includes following or copying the strategies of others and thus require little or no knowledge about financial markets. Another added benefit of these platforms is that these are the best learning approaches for new traders who can trade fearlessly with the help of copy trading and other helpful tools. This review aims at highlighting the positive attributes as well as the flip side of social trading for traders and investors.

Many effective social trading platforms are helping to make trading less complicated and productive for traders and investors. However, with the growing need for these social networks, many new names have also come forward to earn commissions from new traders without providing any worthy services. Unlike fundamental and technical analysis, social trading analyzes financial data by tracking how other market participants are trading. This form of market analysis functions similarly to social media influencing, with the only difference being the underlying product. Expert traders share their trades for newbies in social trading to replicate or modify according to their risk profiles. Social trading first started in the early 2000s, when it was used to mirror successful forex trading strategies.

  • And by clicking the button on the top-right that says “Stop execution now” you can close down all open trades and take your profits with ease…
  • As such, always remember to trade with a proper trading plan and put risk management practices in place.
  • In other words, you do not observe but mimic a more experienced investor sharing his or her profits and, of course, risks.
  • It is all about people portion people to flourish, and the times and aptitudes of the very best.
  • For example, a strategy that works for trading BTC/USD may not work for ADA/BTC.
  • InvestingCube is a news site providing free financial market news, analysis, and education.
  • In every walk of life, humans learn more from their peers’ experiences or from copying experts than from any theory or books.

With social trading, traders and investors can combine their decision-making methods. If those of other social traders, allowing a more in-depth analysis of the investment decision process. In crypto, where volatility is an everyday occurrence, social trading networks propose significant value. As a result, up and coming crypto exchanges that feature social trading networks are now positioning themselves as the go-to platforms for newbies looking to copy expert traders.

Your Trading Goal

The popular zero-commission brokerage platform Robinhood was the central platform to be caught up in the sage; however, other social trading platforms saw this experience as a huge win as well. Both social trading and copy trading refer to a specific investing strategy where beginner investors have a chance to observe and/or follow a professional trader. The idea behind these two approaches is to deliver a more flexible and hands-off experience to those who do not have enough background or a well-established trading strategy. It allows them to take advantage of trading community, reducing their learning curve and making it possible to reduce risk when making a trading decision.

I mean, it might be tempting just to choose the traders with the highest rate of return… But if they’ve only been trading for a few months, that factor alone might not provide the best indication of their overall profitability. It’s also worth looking at what specific markets they trade the most – because making your portfolio of traders as diverse as possible is a very sensible move. By this I mean, if you follow a couple of traders who specialise in forex, then it’s a good idea to balance them with other traders who specialises in gold, silver or some other market.

Social trading explained

In exchange for copying trades and earning money, these copiers pay $NGC directly into the wallets of traders. More recently, we have witnessed the rise of NAGA, the publicly traded social investing platform that has managed to amass a global community of over 1 million users since it was started in 2017. The three main types of trades on a social trading platform are single trades, copy trades, and mirror trades. The trading view is for those who do not want to solely rely on information or instincts and feel the need to discuss their trading needs with other expert and experienced traders. Hence, the Trading view provides access to a discussion panel where traders can ask questions, raise comments, and interact with each other. Short-term trading styles can be very demanding, and by emulating others you can take a break from the intensive and exhaustive processes of doing the research for yourself.

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. With crypto being a hot investment field in 2020 and 2021, many new investors need help to get started, and social trading provides this specialized assistance without the need to hire a financial advisor. No need of brokers and the absence of other formal requirements has attracted a whole new category of potential traders. A lot of newbie traders threw themselves into the crypto trading land of new opportunities never looking back again.

Social Trading in Crypto

Reddit – Users create or follow pages that are fully dedicated to day trading like Wall Street Bets. In the internet, there are many applications and platforms that promote crowd sharing of financial matters. For instance, there are platforms which allow anyone to predict the next market moves. Traditionally, analysts forecasts only focused on top analysts in leading financial institutions such as JP Morgan, Morgan Stanley and Citi among others. IG does not issue advice, recommendations or opinions in relation to acquiring, holding or disposing of a CFD. IG is not a financial advisor and all services are provided on an execution-only basis.

Social trading is a popular way to access financial markets as it enables traders to replicate the positions of others and interact with their peers. Social trading combines trading with social media to create an investment environment filled with collaboration and information. This type of investing is primarily geared to the younger generation, who are just getting involved in the stock market. Some social investment vehicles even let full-scale copying of portfolios, taking out the headache of coming up with a strategy for newer investors.

Trading Signals

Some novices have claimed that social trading reduces the time from novice to experienced trader considerably. An investor is required to open a trading account to trade on a social trading platform. However, it does not require a lot of money to start trading on the majority of social trading platforms in the forex market. Register for a free nextmarketsbroker demo account today and experiment with £10,000 of virtual money to invest as you please.

The Need for Technical Tools

It is also more common to see pairs with USD and BTC as their quote currencies than some other cryptos. For example, a strategy that works for trading BTC/USD may not work for ADA/BTC. A trading pair contains the ticker names of each crypto involved in the trade, often separated by a slash (/) or an en dash (-). The first set of letters represents the first asset in the pair, and the second set represents the second asset. As such, always remember to trade with a proper trading plan and put risk management practices in place.

Many people have lost their money due to the lack of basic technical analysis skills such as reading charts and falling for speculation. Each of these platforms has something unique to offer however, all are great social networks for copy traders. Subsequently, traders need to start searching for seemingly successful and professional traders on the platform. Those traders whose consistent performances indicate that they have made profitable trades should be followed for copy trading. As humans are known to be social animals, much of our learning depends on the people around us.

He started trading forex five years ago, and not long after that, he picked up interest in the crypto and blockchain systems. He has been a writer since 2019, and his experience in the Fintech industry has inspired most of his articles. When Temitope is not writing, he takes his time to learn new things and also loves to visit new places.

Every time the copied trader executes a trade, an investment is made at the same proportional amount for the copier. This practice enables people to spend less time actively trading, as others can do the work for them. Our platform can be accessed from the desktop app and our richly-featured mobile app, so you can keep an eye on the experts and your peers wherever you are. Whether you favour FX trading or the CFD option, by following the principles of social trading you will have the help of experts and those ‘in the know’ to inform your decision making.

Prior to the emergence of social trading platforms, trading required strong technical or fundamental analysis skills to make an investment decision. Social trading has provided another decision-making mechanism for new categories of traders. Social trading is also believed to facilitate the learning curve of wannabe traders. Many social trading platforms have regular competitions where traders compete to win a certain amount of money.