What is Social Trading: Copying Successful Traders

Home / What is Social Trading: Copying Successful Traders

So if you live in the United States and you want to give social trading a try, it’s important to consider what the platform will allow you to invest in to decide if it’s a good fit. If your only option is cryptocurrency, for example, that may or may not work for you based on your risk tolerance. Since crypto is generally riskier than stocks, you may be better off sticking with an online brokerage and joining some investment forums or communities instead to get the social connections you’re after.

what is social trading

You might have heard the oft-repeated statistic that 80 to 95% of day-traders are unprofitable. In fact, research suggests the truth may even be north of 95%. This platform has features like news feed, copy trading and demo accounts for users. The news feed allows users to monitor and copy successful investors, while the copy trading feature does this in an automatic way.

Below is a more detailed explanation of some of the social trading features at NAGA:

Like, the fact that you can use your mobile device to make money. Social trading tools are now available not only on desktop, but also on iPhone, Android and iPad mobile devices. Our social trading mobile app​ provides mobile-optimised charts, indicators and dashboards, along with in-app support and social trading forums. This means that you can receive tips and notifications on-the-go, wherever you may be trading from. ​ is low, it means that they are used to making money from volatile changes to their positions. This can mean that they have an average return of 20% annualised but will regularly make and lose more than 50% on their trades.

Founded in 2007, eToro boasts over 10 million users and allows you to purchase the underlying assets crypto and stick, as well as trade them as CFDs with leverage. User 1 links his account to a social trading platform that posts his trades when they’re made. User 1 buys Apple stock, and the trade is immediately posted to the social trading platform. User 2, who is an avid user of the platform sees that User 1 has made many profitable trades in the recent past and decides to also buy Apple stock. This process is known as copy trading, otherwise referenced as social trading. 68% of retail investor accounts lose money when trading CFDs with this provider.

Consider talking to a financial advisor about the pros and cons of social trading to help decide if it’s right for you. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you.

Even the best traders in the world will lose money from time to time. As a social trader, you are trusting the judgment of a third party while also taking on all of their risk. At the same time, here is how you can leverage it to your advantage. Social trading is a form of investing in which investors can copy and take cues from both their peers and expert traders, allowing them to learn while also earning. This when the majority of so called professionals underperform their benchmark.

Having suggestions from many people can also confuse traders and, in the long run, become unproductive. Copy trading allows traders to copy the trades of more experienced ones, who, in turn, earn a predetermined amount or percentage as profit. Pay attention to how traders act when they lose – There is not a single trader who would not experience a loss in his trading career. The difference between a successful and unsuccessful trader is how they react to a loss.

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You can choose to opt-out of trades that you are not confident about. If you lose faith in a trader, there is always the opportunity to leave him for another. Or perhaps you can trade but lack time to conduct the necessary analysis; then you should consider participating in social trading. The service lets you manually or automatically follow professionals with a track record of trading success and have the same results as them. The fund manager of a PAMM account enables proportional trade allocation to all combined sub-accounts based on balances, equity, or margin level. In this situation, a fund manager may divide trades among sub-accounts based on lots or equity percentages.

  • Many of them include user reviews and overall performance ratings.
  • Trading with NAGA Trader by following and/or copying or replicating the trades of other traders involves high levels of risks, even when following and/or copying or replicating the top-performing traders.
  • At that point, some smart individuals saw a new way for people to interact — sharing statuses, photos, events, videos, and so on.
  • Picture Facebook but instead of a feed full of photos of people from high school, you have access to your trading network’s transactions and interactions.
  • The community that comes along with it may also appeal to investors who want to be able to discuss strategies or bounce ideas off someone else.
  • Trading can be hard so this is another alternative for people who don’t know how to trade – they can simply copy the more experienced traders.

This allows you to follow top performing traders and copy their trades automatically, so that when they trade, you trade. This is an excellent way for beginners to start trading, and it’s also ideal for more experienced traders looking to learn new strategies and strengthen their portfolio. https://xcritical.com/ Social trading is an alternative way to trade by allowing individuals to observe and follow the trading behavior of peers and experienced traders. In financial markets, social trading has been described as a low-cost, sophisticated alternative to traditional financial products.

Try a demo account first – Before investing initial capital, especially for newcomers to social trading, register and try a demo account. Once you are familiar with it and feel confident, set up a real account. With the help of social trading technologies, everybody can now participate in and earn from the financial markets.

Overview: Social trading vs copy trading

CFDs are contracts for difference, financial products that enable the trading of an asset without actually ever touching the asset in question. This guide will dial in on Social Trading, conducted on a variety of financial markets. When choosing a social or copy trading platform, be sure to consider important factors like local availability and whether the assets you’re interested in trading are supported. One of their more useful features is that they’ll present combos of traders they think you ought to follow based on your preferences. Users can follow other traders who are ranked by performance, stability, behavior, and outlook.

what is social trading

Is a world-class tool that helps you trade like an expert, no experience needed. In other jurisdictions, they also offer stocks, commodities, ETFs, Forex, and CFDs jurisdictions. Update social trader tools it to the latest version or try another one for a safer, more comfortable and productive trading experience. Get tight spreads, no hidden fees and access to 11,500 instruments.

Benefits Of Social Trading

These accounts enable you to trade lots in their standard form, which is equivalent to $100,000 per lot. Traders copying these sorts of accounts will be engaged strictly in the Forex market. Once you’ve selected a trader, click on them and set your copying preferences. You can set the amount you want to invest and to stop copying when the copy value drops below a certain figure. Then just click ‘copy’ and you’re good to – the CopyTrader tool does the rest.

what is social trading

The followers also need to have some level of knowledge to understand and execute the signals provided. As more investors turn to one another for advice on investments, social investing is becoming more and more popular. Depending on where you are in your financial path and where you intend to settle, a social trading strategy may certainly be a method to try at the beginning. Moreover, traders could use the social trading concepts while still maintaining command over their transactions by employing a variety of signals and indicators. Social trading can serve as verification for other types of analysis by observing market sentiment and other traders’ activities. An investor can consider any trading factors more or less independently with a common social trading account.

You then copy everything the leaders do automatically in real-time. This style of social trading works for those with little to no knowledge of trading because they don’t need to have any input while still getting the same returns as the traders they follow. Don’t invest more than you can afford to lose – Your trading journey will begin with a few weeks of testing various traders and strategies. It is important to keep in mind that most traders lose capital when they invest in the financial markets. We’re going to look at each of these in turn, and alternative ways to trade socially. The goal in profiting with social trading isn’t to select winning markets; it’s to select winning traders.

✅Don’t Rush Trades

As a very minimum, it is recommended that traders check their trades at least once every day. The best due diligence is to understand the logic behind the trading decisions made by a leader, and to be interactive in asking questions about the strategy one is using. Discover forex trading basics, including trading hours, leverage trading platforms and more.How to Trade Bitcoin All you need to know about Bitcoin, including how it started and how it works.What is Copy Trading? Read on to learn more about copy trading and how it could benefit you.

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A copied trader that is taking a lot of risk in their strategy is putting a lot on the line in order to make the returns they’re generating. You can take various levels of risk when it comes to your investment. A large following on a social trading platform is good; this means that there are more traders to choose from, and therefore more strategies and potential profit methods to choose from.

NAGA delivers to you a convenient interactive News Feed where You can exchange experiences in posts for the community and engage with other traders by liking, commenting and sharing. You can use both the News Feed and the Messenger to grow your network by generating content that’s both relevant and valuable. This way you can not only increase your followers but also your copier-base. Sure, auto copying other traders from all around the world is important and necessary but a connection between traders is what makes the whole experience much useful and incentive.

Copy trading: taking social trading to the next level

Copying traders only need to have a relative minimum amount equivalent to how much the trader they’re copying is requiring. This also depends relative on your platform that you’ve chosen. Certain platforms require a certain amount be deposited to get started, while others do not. Generally, we recommend a $250 starting account for those who are new to social trading, just so that you can maintain a handle on the process. ‘Copied’ accounts are accounts within social trading that are being replicated or imitated.

Not to worry, as far as we know none of the social trading sites divulge the actual monetary amounts of investment in each trade. If you run into one that does, it’s advisable to stay away as you don’t want to run the risk of becoming a target. Getting to see historical performance, risk score, which assets are being invested, assets under management, it’s a big plus for someone that wants to start copy trading. An increasing number of people is searching for new opportunities of investment in the stock and crypto market.

You’re assuming, of course, that they know what they’re doing. As the trade opens, closes, and amends according to the strategy you choose to follow, it doesn’t require you to make daily trading decisions. In short, a social trading platform increases the opportunities of making money and learning to trade in the field. Please note that by investing in and/or trading financial instruments, commodities and any other assets, you are taking a high degree of risk and you can lose all your deposited money. You should engage in any such activity only if you are fully aware of the relevant risks. BrokerChooser does not provide investment or any other advice, for further information please read our General Terms and Conditions.