Social
Trading
Guide
2018
New to social trading? Looking for a dynamic, ultra-effective way to manage your investment portfolio? Want to become a popular investor copied by a multitude of traders? You’ve come to the right place at the right time! This in-depth guide explains all you need to know about social trading in a simple and clear way.
What is Social Trading?
Social trading is a dazzling evolution of online trading which has attracted, literally, millions of investors and traders worldwide. More and more individuals are harnessing the incredible synergetic power of crowd wisdom. In the process, many of these individuals gain unheard-of returns on their investments with the bonus of learning from experienced traders and observing how they conquer the financial markets.
Even new investors and traders can now tackle more than 1000 financial instruments (stocks, forex, ETFs, commodities, interest rates, cryptocurrencies, and stock indices) with little or no experience by simply copying the trades of seasoned traders with proven track records of profitability and acceptable risk scores.
4
RISK
+
This young popular investor (eToro) achieved a return of almost 27% during the last 12 months.
eToro’s editor’s choice of popular investors currently has an average 12-month return of more than 42%!
(Past performance is not an indication of future results)
Social Trading Platforms
Most social trading platforms work in basically the same way. Investors are able to follow other traders and copy their trades with little or no extra cost above the spread and the usual costs associated with trading, like for example, rollover fees.
The spread offered by social brokers is typically a bit wider than that of normal brokers. This compensates for the commission paid to popular investors.
On social trading platforms, investors and traders are usually able to communicate with the popular investors they copy. The other great feature about social trading is that copiers can see which instruments the popular investors are trading and with which parameters. This adds to the great learning experience offered by social trading environments.
Best Social Trading Brokers
Broker
Benefits
Regulation
Instruments
2017 TOP CHOICE
Smart tools to easily analyse traders’ performance Trading Academy Largest social broker Free practise account that doesn’t expire Failsafe flash crash protection on cryptocurrencies eToro USA LLC does not offer CFDs
CySec
FCA
More than 1000 instruments including:
- Cryptocurrencies
- Forex pairs
- Commodities
- Stock indices
- ETFs
- eToro CopyPortfolios
- Stocks
71% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
It takes less than 10 minutes to be in a live trade
Algo trading allowed by copied- and copying traders Small lot sizes available Advanced ZuluGuard account protection feature Integrated with more than 40 forex brokers
EU
HCMC
Forex pairs
Commodities
Stock indices
German Bund
Selected cryptocurrencies
Fixed spreads: 1.8 pips on major FX pairs Practise bonus - up to $60 reward for learning how to trade Zero commission Live feed of trading ideas
CySec
Currencies
Commodities
Stock index CFDs
Futures
Cryptocurrencies
Stocks
Award winning trading platform - TradeHub Wide range of financial instruments offered Automated risk management (with copy trading)
FCA
Currencies
Commodities
Stock index CFDs
Bitcoin
Bonds
Interest rates
Stocks
FX LEADERS CHOICE FOR 2018
eToro - The Giant Leader in Social Trading
eToro is the largest and most established social broker in the world with more than 6 million members. For years, eToro has been perfecting its social and copy trading platform to offer investors and traders an incredible multi-purpose platform on which to trade, copy other traders, share trading and strategic information, and filter out suitable popular investors to follow and copy.
Copying profitable traders on eToro’s copy trading platform is really simple and effective. Simply analyse the traders’ performance and risk profile with eToro’s smart analytical tools, select the traders you would like to follow, and start copying them.
Should You Execute Your Own Trades or Copy Other Traders? Or Both?
An excellent aspect of social trading platforms is the great flexibility it offers traders in managing their portfolios. Not only can traders commit all the trading to the popular investors they copy, they can also combine their own trading with the expertise of adept and hardened traders. This can be a really convenient way to diversify your portfolio and get some of the greatest traders out there to handle much of the workload for you while learning from them. Incredible!
Of course, traders can handle all the trading themselves and also proceed to earn commission as popular investors. By getting copied by potentially thousands of traders, it is possible to earn a considerable income on top of their personal gains. In this way, talented individuals are able to do large-scale fund management without the financial services provider licenses required for traditional fund managers.
Forget about suits and ties! With eToro, talented individuals can now do large-scale fund management without heaps of paperwork and licenses.
Personal trading experience and confidence
New traders or traders with limited live trading experience can greatly benefit from copying other more experienced traders. Trading is usually not easy for beginners and presents numerous challenges which include overcoming psychological and emotional hurdles.
Not only is it safer for new traders to have their funds managed by skilled individuals, but it also gives them the opportunity to observe which instruments are being traded and with which parameters (for example where stop loss- and take profit orders are placed). Besides this, newbies have the opportunity to interact with popular investors (the traders who are copied) and acquire valuable insights about the markets, risk management, and of course, copy trading.
Time available for trading and market analysis
Time is money and not everyone has the time or wants to sacrifice their time to actively manage an investment portfolio. The good news is that with minimal research and effort, you can allow chosen popular investors to do all of the time-consuming analysis and trade execution for you. It’s really simple and effective.
Spend your time on the things you like while selected popular investors work hard to grow your investment!
The degree of diversification you require
Integrating social trading into your investment approach can have several advantages, of which diversification is an important one. Social trading platforms provide investors and traders with a wide variety of popular investors they can copy.
Of the popular investors which can be copied, some specialize in cryptocurrencies, for example. Others use a combination of different asset classes. Some avoid cryptocurrencies and fiat currencies completely and focus on stocks. So we can continue to talk about all the different types of popular investors.
What’s so handy about social trading, is that you can investigate many different trading parameters of these popular investors to find out how aggressive they trade in terms of risks taken (risk score), which assets they focus on, how long they hold trades for, etc. This enables you to incorporate different popular investors into your investment portfolio in a way that balances your risk and diversifies your portfolio effectively.
You can either allocate your entire portfolio to different popular investors or split it between your own trading and theirs. Do you see all the great possibilities?
When deciding how to manage and allocate your funds,
and whether to do all the trading yourself or whether to copy other traders, the following aspects may be considered:
Personal trading experience and confidence
New traders with limited live trading experience can greatly benefit from copying other more experienced traders. Trading is usually not easy for beginners and presents numerous challenges itch include overcoming psychological and emotional hurdles.
Not only is it safer for new traders to have their funds managed by skilled individuals, but it also gives them the opportunity to observe witch instruments are being traded and with which parameters (for example where stop loss and take profit orders are placed). Besides this, newbies have opportunity to interact with popular investors (the traders ho are copied) and acquire valuable insights about the markets, risk management, and of course, copy trading.
Time available for trading and market analysis
Time is money and not everyone has the time or ants to sacrifice their time to actively manage an investment portfolio. The good news is that with minimal research and effort, you can allow chosen popular investors to do all of the time-consuming analysis and trad execution for you. It's really simple and effective.
The degree of the divrsification you require
Integrating social trading into your investment approach can have several advantages, of itch diversification is an important one. Social trading platforms provide investors and traders with a wide variety of popular investors they can copy.
Of the popular investors witch can be copied, some specialized in cryptocurrencies, for example. Others use a combination of different asset classes. Some avoid cryptocurrencies and fiat currencies completely and focus on stock. So we can continue to talk about all the different types of popular investors.
What's so handy about social trading, is that you can investigate many different trading parameters of these popular investors to find out how aggressive they trade in terms of risks taken (risk score), witch assets they focus on ,how long they hold trades for, etc. This enables you to incorporate different popular investors into your investment portfolio in a way that balances your risk and diversifies your portfolio effectively.
You can either allocate your entire portfolio to different popular investors or slit it between your own trading and theirs. Do you see all the great possibilities?
Social Trading Platforms
Most social trading platforms work in basically the same way. Investors are able to follow other traders and copy their trades with no extra cost above the spread and the usual costs associated with trading, like for example, rollover fees.
The spread offered by social brokers is typically a bit wider than that of normal brokers. This compensates for the commission paid to popular investors.
On social trading platforms, investors and traders are usually able to communicate with the popular investors they copy. The other great feature about social trading is that copiers can see witch instruments the popular investors are trading and with witch parameters. This adds to the great learning experience offered by social trading environments.
Social Trading FAQ
Can I practise copying traders with virtual money (with a demo account)?
Yes, you can practise with $100,000 virtual money for as long as you want to (with eToro). Remember, any gains or losses on the virtual account are not real.
Can I copy more than one trader?
Of course. You can copy up to 100 different popular investors (traders) simultaneously on eToro, for example.
What is the minimum amount to copy a popular investor (trader) with?
You can copy a trader with a minimum allocation of $200 (eToro).
The minimum trade size on some instruments like bitcoin, for example, is $250 on eToro’s trading platform. How can I copy a popular investor with $200 if he trades bitcoin which requires a minimum of $250?
Even if you copy a trader with only $500, you are able to copy several bitcoin trades initiated by that trader. This is one of the great advantages of copy trading - you can trade instruments, like in this case, bitcoin, with position sizes as small as $2. If the trader you copy uses 5% of his account’s equity to open a trade on bitcoin, you will have a $5 bitcoin trade opened in your account if you’ve allocated $100 to that trader.
Can I control the trades I copied from other traders?
You can close copied trades individually but you are unable to modify trade parameters like stop loss and take profit orders. You can also close all the trades which originated from one popular investor (copied trader) simultaneously, by selecting the ‘Stop Copying’ option.
Does it cost me anything to copy other traders?
No, the traders you copy receive a kickback from the broker. Whether you’re trading by yourself or copying others, the spread remains the same. There are some exceptions to this rule but most copy trading works like this.
Is it possible for me to execute my own trades and copy other traders using the same trading account?
Yes, you don’t need separate trading accounts.
Top 4 Brokers