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What is Social Trading, its Benefits and Top Social Trading Platforms
Investing in financial markets such as stocks, Forex and cryptocurrencies requires extensive knowledge and experience. You need to be up-to-date with news events affecting the business world, and also have the capability of reading charts, analytics reports and understand trends.
If you lack this capacity, chances are you may lose your money in the market. It’s unfortunate that many people continue to lose their hard earned money in the financial markets simply because they have little knowledge of how to and when to invest. Social trading comes in handy in cubing such challenges.
So, What is Social Trading?
Social trading works more or less like a social network. The only difference is that instead of sharing selfies or lunch photos, on a trading network people share trading ideas. Here traders interact, watch trading results of other professionals and brainstorm on market situations in real time.
As an investor or less experienced trader, in social trading your financial trading decisions are based on other skilled investors generated financial content collected from various reliable platforms. In other words, once you identify a successful trader and you like their trading strategy, you can start following them and copy their trades.
What are the benefits of Social Trading?
Well, some of the benefits of Social Trading include:
· Quick access to reliable trading information
Social Trading platforms cut down on the process of searching for reliable trading information by providing extensive information from professional traders across the world. You also get to interact with the skilled traders on the platforms like one-on-one Tutorage.
· Quick grasping of the trading market
Social Trading platforms reduce the duration and cost of becoming a professional investor by allowing you to learn from seasoned investors, quickly and efficiently.
· Earning while still learning
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Social Trading platforms allow you to learn from experienced investors, where you get to know how to navigate the trading market and still earn some money by copying their trades. Therefore you don’t have to wait until you have all the required knowledge for you to start earning.
· Build a trading community of investors
Social trading platforms build a community of investors, where you get to interact with other investors and share information, while also collaborating on different ventures. It being an online platform, you can access trading information from anywhere in the world quickly and easily as long as you have the internet.
Popular Platforms for Social Trading
Now that you know what social trading is as well as some of its benefits, how about you learn a little about platforms you can use for Social Trading.
In this post, we shall explore both traditional social trading platforms as well as modern/crypto social trading platforms:
Spiking has to its credit the first technology trading app designed to help the average investor understand the nitty gritty of the trading market. The verified real-time updates help the investor in ascertaining the reasons for the spike in the trading market. It helps the average trader follow the Big Investors like Warren Buffett, as they trade on the stock market, helping the investor in making informed decisions rather than relying on instinct. It has around 170,000 sophisticated investors with it right now.
The key features of this app include:
• See what stocks are active in NASDAQ, Dow Jones, NYSE, AMEX, S&P and others
• All American stock market price updates, news feeds, and price alerts
• Get notified when friends buy or sell stock options
• Track sophisticated investors real-time
Spiking is a management system using Blockchain Spike Protocol to allow you, as a trader, to locate and follow market whales with the aim of learning or collaborating with them. Here, whales refer to seasoned traders, large holders of cryptocurrency tokens, mining pools or key executives of companies owning cryptocurrency tokens.
Spiking will collaborate with leading whales to offer you, as a trader, Certified Smart Trader (CST) program that will allow you to learn about trading and investing in cryptocurrencies. You will also be able to gather and verify information about the whales. And through its Spike Protocol, it will be able to verify all trading transactions to ensure there is no falsification of information.
It will also use Spike Tokens as a reward incentive and for all transactions on the protocol. As a trader, you will be able to pay for the CST program with Spike Tokens. Also if you graduate from the program as a top student or you get voted as the top instructor in the CST program, you will be rewarded in Tokens. The tokens will essentially allow users to access the Spiking Platform and its services.
eToro is a platform allowing users to share and access each other information and trading activities like on social networks.
The platform has features such as News Feed, Copy Trading and demo account for users. The News Feed feature allows users to monitor and manually copy their preferred traders, while the Copy Trading feature automatically does the coping for users. The demo account is completely free and unlimited for users, and they can try all the eToro trading and social features.
TradingView is a cloud as well as a web-based social trading platform for Futures and Forex traders. It offers incredible charting tools and social components for beginners and advanced traders to view and share trading ideas.
Through a forum setting, the platform enables users to follow, copy as well exchange ideas with other like-minded traders. Traders consult with their peers and with more advanced traders on the current market conditions. The conversations are in real time.
Traders publish their trading ideas, and they get feedback or comments from other traders trading the same instrument. The goal here is supporting each other to prosper as traders by sharing ideas and seeing what other investors are doing.
Covesting is a Blockchain and smart contract based platform that allows beginner investors connect with skilled traders to earn profits in the crypto market. Here, as an investor, you are able to earn profits in the crypto market by simply copying trading strategies from skilled traders automatically. You get to choose the trader to copy from according to his/her strategy and level of trading skill.
On the platform, as an investor, you get to see and pick skilled cryptocurrency traders according to their trading strategy, which matches your profit objective. Before you pick a skilled trader, you get an overview of each skilled trader’s strategy, read their trading strategies reviews, access history of their real-time trading strategy. Therefore you are able to know, before choosing, the best-skilled trader to match your profit objective. And because the skilled traders are many, you can choose to subscribe to as many professional traders as you want.
But it’s not only beginner investors who benefit from the platform; professional traders benefit too through profit from profit sharing from an investor.
To wrap up, we have learnt that social trading enables free flow and access to information to help individuals make informed investment decisions through leveraging on the power of the community.
Social Trading platforms offer beginners avenues where they can easily and efficiently trade in the crypto market without the fear of beginners failures. Of course, they do not completely eradicate failure, but they minimize chances of failure.
Since social trading platforms cater for both beginners and professionals, they create a reliable trading community, which enables you to earn profits as you learn. Try social trading here and share with us your experience in the comment section below.
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eToro Brings the Promise of Social Trading to The World.
eToro is the world’s leading social trading network. Powered by millions of users from over 140 countries, eToro has been able to refine their knowledge and experience into practical trading tools.
Alongside being a one-stop shop for stock trading , online investing, crypto trading and much more, it has also introduced many novel social trading features. But what makes eToro social? The array of social features eToro offers is vast and extends well beyond the trading platform itself. While pioneering social features and making the financial market more friendly and accessible to almost anyone around the world, eToro has also extended its reach and is maintaining active social channels.
Copy other traders
Trade like a Steve
Discovering other traders to copy on eToro is quite intuitive: On the Copy People screen, there are several methods to locate people that may match your trading and investing needs. The Editor’s Choice section presents Popular Investors (more about the program below) that have recently been trading that are worth checking out.
Also, it is quite simple to locate traders by using the search tool and filtering the results. There is a variety of parameters to choose from, such as gain, Risk Score, location and many others. Since eToro operates in complete transparency, each trader that can be copied has valuable information on their eToro profiles that will help you determine your ideal choices for creating your people-based portfolio.
The Popular Investor program
To build a strong community of traders and investors, and to encourage successful traders to share their wisdom, eToro has created the Popular Investor program. This program rewards successful members of the eToro community for being copied. Simply put, the more copiers they have, the larger their payout. The payments to Popular Investors are given on top of any profits made from trading and can reach as high as 2% of their total AUM (assets under management).
The democratisation of financial knowledge has created a situation in which anyone who puts in the time and effort to study markets, and build a solid trading and investing strategy, can potentially become successful. Therefore, it is no surprise that Popular Investors come from all walks of life and the program has enabled many eToro traders to earn a second income regardless of their financial background. To learn how you too can become a Popular Investor, visit this page .
The Social News Feed
Another feature that is unique to eToro is the personalised, social News Feed. Incorporating elements from the worlds of social media and online trading, your News Feed helps you follow the financial instruments and traders you like, interact with fellow members of the eToro community, open discussions and much more.
Just like on any social network, you can post your own updates (and even tag the instruments or people you’re talking about), share posts to your feed, comment on others’ posts and gradually create a feed that is tailor-fitted to your trading and investing interests.
On the eToro platform, you will also get notifications when a user you copy writes a new post, an asset on your watchlist becomes volatile and many other important updates. Notifications appear both on the web platform and as push notifications straight to your mobile device.
Your eToro profile
Your profile on eToro is your way of presenting yourself to the eToro community and get valuable statistics about your trading habits. If you want to get copiers, make sure to verify your account , add a profile picture and write something about yourself.
There are four tabs on your profile:
- Feed: Shows all of your social activity on the eToro network, including your posts and comments. This tab also shows your bio so make sure to write a few words about yourself and your trading strategy
- Stats: Presents your gain and fail/success ratio since your joined eToro, enables you to track your Risk Score, shows your portfolio composition and more
- Portfolio: This tab shows the community your portfolio in detail, enabling other traders to see what you trade and invest in, helping them decide if they would like to copy you
- Chart: This tab presents a simulation of what a $10,000 investment in you would yield over time
We realise that some of our clients would like to keep their trading activity private. If you wish to share less information, flip the ‘Private Profile’ switch on your profile. To personalise your profile’s privacy, please go to profile privacy settings .
Extending beyond the eToro platform
Since eToro places such high emphasis on open discourse and wisdom sharing, the platform also offers social features that reach outside the platform itself. For example, traders can easily share their trading decisions and actions on other social networks, such as Facebook and Twitter. In addition, eToro clients can use the platform’s advanced technical analysis features to create their own charts to support their trading actions, and share them both on the platform and outside it.
eToro keeps a friendly, professional and pleasant community by requesting all of its clients to adhere to the Community Guidelines .
eToro on social media
eToro is active on many social channels, keeping both our own community and the general social media public informed. You can find us on:
Get recent eToro news, learn about new products,tune in to live broadcasts and stay in touch with the eToro community
Get real-time updates about the eToro platform and special promotions, follow recent news and join the financial conversation on the Twittersphere
Follow recent eToro updates in a clear, succinct graphical format. Follow our public updates and learn more about the platform and its features
Explore a variety of content, including video tutorials, interviews, informative videos and much more
Get notified if the platform is down and when it is up again, receive updates on new products, and get important news and notifications regarding the eToro platform
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Are you ready to take your first steps, join the Fintech revolution and explore the endless possibilities offered by social trading?
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You should seek advice from an independent and suitably licensed financial advisor and ensure that you have the risk appetite, relevant experience and knowledge before you decide to trade. Under no circumstances shall eToro have any liability to any person or entity for (a) any loss or damage in whole or part caused by, resulting from, or relating to any transactions related to CFDs or (b) any direct, indirect, special, consequential or incidental damages whatsoever. Cryptocurrencies markets are unregulated services which are not governed by any specific European regulatory framework (including MiFID). Therefore when using our Cryptocurrencies Trading Service you will not benefit from the protections available to clients receiving MiFID regulated investment services, such as access to the Cyprus Investor Compensation Fund (ICF)/the Financial Services Compensation Scheme (FSCS) and the Financial Ombudsman Service for dispute resolution. Trading with eToro by following and/or copying or replicating the trades of other traders involves a high level of risks, even when following and/or copying or replicating the top-performing traders. Such risks includes the risk that you may be following/copying the trading decisions of possibly inexperienced/unprofessional traders, or traders whose ultimate purpose or intention, or financial status may differ from yours. Past performance of an eToro Community Member is not a reliable indicator of his future performance. Content on eToro’s social trading platform is generated by members of its community and does not contain advice or recommendations by or on behalf of eToro – Your Social Investment Network.
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Social trading explained
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. Discover how social trading works and the risks involved.
What is social trading?
Social trading is a form of dealing that enables traders or investors to copy and execute the strategies of their peers or more experienced traders. While most traders perform their own fundamental and technical analysis, there is a class of traders that prefer to observe and replicate the analysis of others.
Social trading is often thought of as a type of social network, as the function enables traders to interact with others, watch each other’s trades and learn about decision making processes.
How does social trading work?
Social trading works by creating quick access to financial markets, enabling beginner and experienced traders alike to share strategies and copy each other’s trades. In fact, new technology and advanced platforms have made it easier than ever to become a social trader. You can either use a comprehensive social trading platform, or adopt individual elements of the practice.
Some traders might want to use a fully integrated social trading platform, which facilitates the complete sharing of trading strategies using a ‘copy trading’ or ‘mirror trading’ feature. As with a social networking platform, a social trader could choose to ‘subscribe’ to another trader’s channel, whose positions would be broadcast on a live feed, with the option to copy their deals. So, if trader A executes a trade, trader B would automatically execute the same trade.
The incentive for experienced traders to share their strategies, is that they are often rewarded with both money and status – social trading networks usually have a leader board based on popularity and success rate.
Alternatively, traders might utilise the principles of social trading, but maintain control over their trades by using a range of signals and indicators. By looking at the market sentiment and activity of other traders, social trading can act as confirmation of other forms of analysis.
Social trading: which markets can you trade?
Social trading first started in the early 2000s, when it was used to mirror successful forex trading strategies. Since then, retail traders have begun to use it for an ever-growing number of trades across asset classes, as anyone can participate with little-to-no previous experience of trading. So, social trading shares, commodities and indices has also become popular.
What you need to know before you start social trading
Social trading is not for everyone. Although it has been praised for knocking down some of the barriers to financial inclusion, it has also been criticised for downplaying a lot of the knowledge needed to properly negotiate financial markets.
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.
Financial markets require knowledge and patience, and although social trading can potentially help you skip a few steps, it does so at the expense of experience. It is important to make sure that you understand exactly what you are doing and have an appropriate risk management strategy in place.
When you start social trading, you are taking on another individual’s trading plan, but a plan should be unique to you and your aims. Although the strategies of others can be used to create some guidance for your trades, their plans will be suited to their own goals, motivations and so on. Everyone has different risk appetites and capital available, so trading the way someone else would isn’t always necessarily a good idea.
How to start social trading
IG provides a range of ways to get the benefits of social trading, without giving control of your strategy to a third party. However, it does not offer a fully integrated social trading platform.
The primary benefits of social trading include being part of a community that shares advice and trade ideas, establishing buy and sell signals for trades, gaining an awareness of market sentiment and the automatic execution of trades. We’re going to look at each of these in turn, and alternative ways to trade socially.
Social trading gives you access to a community of traders who share ideas and give advice on trades. The tool can be extremely useful for getting information on upcoming events and the market sentiment surrounding particular assets.
When you use IG Community, you’ll get access to an online trading forum that enables traders of all backgrounds and experience levels to share their knowledge and ideas. Through this interactive space, you can chat with other traders and a host of trained IG staff to advance your trading.
Social trading enables you to replicate the buy and sell strategies of other traders. Although this can reduce the amount of preparation you need to do, it could also mean you become out of your depth quickly. And there is no guarantee that the third party you have chosen to copy has done the appropriate amount of analysis either.
By using technical analysis, you can identify the right time to trade on a range of markets including forex, indices and commodities. The signals function of the IG online trading platform gives you buy and sell suggestions from two third-party providers: Autochartist and PIA-First. Both providers monitor the markets on your behalf, giving you access to in-depth technical analysis and professional expertise.
Although the signal service gives you detailed research, you are still making the decisions and retain full control over your trading. 1 This means that you can fit the trading strategy to your needs.
Market sentiment indicators
One of the most common ways to identify trends and the inclinations of other traders is to use market sentiment. Market sentiment is essentially a representation of the mood of financial market participants, but it can give you insights into what is being traded and when.
Gauging market sentiment can be difficult, as there are so many factors that can influence whether traders are optimistic or pessimistic. But there are a few ways to measure market sentiment, such as:
- The Commitment of Traders (COT). The COT report is published by the Commodity Futures Trading Commission (CFTC) every Friday and shows the net long and short positions of speculative traders. It can help outline how other traders are positioned and the overall attitude of the market
- IG client sentiment. Real-time trading data from IG shows trader sentiment across key markets including shares and forex. You can see the information displayed at the top of IG market data pages – such as those for EUR/USD, gold and Apple – simply by searching for your chosen market via the search bar. It appears as a percentage of IG clients trading in a certain direction during the current or most recent trading day
- The volatility index (VIX). The VIX tracks S&P 500 options prices and measures the implied volatility of the stock market. Rather than suggesting the price direction, the VIX shows how much fear is on the market – the higher the implied volatility, the more fear about a current trend, where as low volatility suggests a more stable market
- High/low sentiment ratio. This indicator compares how many shares are at their highest level over the previous 52 weeks compared to the amount making 52-week lows. If the average trend is toward the lows, it shows a bearish leaning and if the trend is toward the highs, it shows the bulls are in charge
Social trading on MT4
The popular trading platform, MetaTrader 4 or MT4, has a function called ‘sentiment trader’, which enables you to analyse market sentiment and view historical sentiment charts that indicate how other traders have performed.
The service is relatively easy to understand: it displays the percentage of traders who currently have, or have previously had, an open buy or sell position on a particular asset. The indicator uses information from real accounts, rather than just price action.
Adding indicators to your MT4 account can help to enhance your trading and take greater control of your positions.
Get access to a range of MT4 apps and indicators, including sentiment trader, with IG.
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