Best Social Trading platform providers for brokers
Can you make money from Social trading?
How became a trader in Social Trading network
Main risks of Social trading platform
Summary
Related Articles
FAQ
Editorial Note: While we adhere to strict
Editorial Integrity,
this post may contain references to products from our partners. Here's an explanation for
How We Make Money.
None of the data and information on this webpage constitutes investment advice according to our
Disclaimer.
Social trading (copy trading) platforms offer a solution to several issues a novice trader may have. Firstly, they provide an opportunity to start earning money in the financial markets without having extensive knowledge and experience. Secondly, as you copying trades of experienced traders, you are also learning from indicative examples of the masters of their craft.
As an additional bonus, this is a very promising type of passive investment. You can copy other traders’ transactions, dedicating only a small part of your time to trading. Sounds appealing? Let's take a closer look at the copy trading platforms and how to start earning profit using them.
What Is Social Trading and Copy Trading Network?
Social trading is a notion based on the principles of a social network. Unlike Facebook and Twitter, however, traders join this network not only to communicate but also to invest together.
Experts claim that the emergence of the social trading platforms has changed the rules in the financial market. Previously, all traders played against each other, while now, they joined efforts to face the market. While novice traders mostly lost money previously, they now have an opportunity to reach the profitability of a professional trader. You can also learn information about pros and cons of collective trading.
Copy trading is one of the manifestations of social trading that allows to link accounts of the beginners and professional traders. Novice traders in this case can automatically or manually copy the traders of experienced traders. Investment threshold is reduced to rather low amounts, ranging from $1 to $5,000 depending on the platform.
The drawback of copy trading is that even professional traders are not immune to losses. Also, public trading also has a reverse side of the coin – the more people are copying a certain strategy, the less effective it becomes.
So, let’s sum up the knowledge we’ve gained so far.
👍 Pros
Allows to merge knowledge and experience of thousands of traders
Provides a safer entry to the market for the beginners without knowledge and experience
Provides a source of passive income, which is higher than average in the market
Low entry threshold
👎 Cons
Even experienced traders are not immune to losses
As the popularity of a strategy grows, its efficiency often decreases
Using the features of the social trading platforms, you can link a part of the funds on your account to the accounts of a professional trader. From then on, all actions taken by the professional trader will be automatically copied on your account.
To start investing in the social trading networks, you need to take several important steps:
Find a reliable broker that offers this type of service.
Select one or several managers, whose traders you will be copying. For this, you will need to perform analysis of their financial results over a long period of time (the longer the better).
The next step is to study conditions of working with the traders and distribute your investment capital among them at the required ratio.
Customize the social trading platform to fit your needs. Many systems offer in-depth customization of risk criteria; it is also possible to select fully automatic copying or partial.
Regularly view the results of performance of your managers in the statistics and adjust the size of your investment.
Below, we will take a closer look at how social trading works at each of the steps. You will also have an opportunity to familiarize yourself with the lists of the best brokers for copy trading, best providers of social trading platforms and learn in detail how to choose a trader for copying trades.
How social trading works: a real-world example
Let’s assume that a novice investor, let’s call her Linda, has a problem. She doesn’t know a thing about Forex and stocks, but she has $1,000 to spare and she would like to earn passive income. Linda, however, is not willing to put up with the profit the banks offer, as it often does not even cover the inflation.
On the other side, there are experienced traders, let’s call them Alex and Mark, who have an issue of their own. They spent many years studying the market and now their strategy is bringing a good and stable profit. Alex and Mark decide that they are ready to scale their strategy, but finding capital using traditional methods requires a lot of time and effort.
Using a copy trading network, Linda, Alex and Mark can set up a simple interaction model that will solve the problem of a novice investor as well as the issue of successful traders. In this model, Linda decided to split her capital equally between the two managers – all she needs to do for that is to subscribe to them in a few clicks.
From then on, she uses half of her capital to copy Alex’s trader and the other have – Mark’s trades.
Linda
Copy Trade
Alex
Copy Trade
Mark
20 Best Social Trading Platforms
The first step of starting to work on a social trading platform is the search of a suitable broker. We have compiled a list of 20 best brokers, working with which you will be able to copy trades of successful traders. Noteworthy, a number of brokers have proprietary social trading platforms, while others offer developments of one or several third-party providers.
Broker
Minimum Investment Amount
Assets for copy trading
Social Trading Platform
Regulator
Место: 1
1
RoboForex
$100
Over 12000 trading instruments: Forex, Stocks, ETF, Crypto, Commodities, CFDs
5 steps to choose a good broker for Social Trading
When choosing a broker for social trading, Traders Union experts recommend taking these five steps that relate to assessment of the broker’s reliability and the social trading possibilities it offers its customers.
The 5 steps to broker selection include the following:
1
Reliability and regulation assessment. Many brokers offer trading on copy trading platforms, including those with questionable reputation, which is why it is important to choose one with reliable regulation. Traders Union experts particularly praise the regulation in the UK (FCA), European Union (CySEC), Australia (ASIC) and other developed countries.
2
Trading conditions. The issues of commissions, diversity of trading instruments and order execution quality are priority also in copy trading. Some brokers charge extra in the spread, when offering this kind of service, which could have a substantial impact on the result. All nuances must be clarified in advance.
3
Studying the scale of the network. In terms of social trading, the bigger the network, the better opportunities it provides its members. Investors have a bigger choice of managers and the manager has more opportunities to attract capital.
4
Transparency. It is important that all statistical data of the managers provided in public access and are available for an independent audit.
5
Platform’s technological effectiveness. The best platforms offer in-depth settings for selection of traders and risk management criteria, which allows you to improve your chances for success.
eToro Copy Trading System
eToro is a pioneer of the copy trading systems, as it launched its own platform back in 2010. Traders Union experts, however, chose eToro as the best social trading broker not for its reputation alone. Thanks to continuous development of this service and excellent results in the present, this broker and its platform are indeed worthy of attention. We assessed the broker based on the above criteria, which placed it at the top of our list. Let’s take a closer look:
eToro is regulated by the top regulators: Australian Securities and Investments Commission (ASIC), British Financial Conduct Authority (FCA) and European Cyprus Securities and Exchange Commission (CySEC).
Trading Conditions.
In terms of this criterion, the broker is among the leaders, offering over 2,000 assets for trading. The important advantages include access to US stocks trading without commission and also availability of the proprietary platform for direct cryptocurrency trading. In addition, eToro CopyTrader is one of few platforms, where the investor does not give up part of his earnings to the manager as a fee, which saves 10-15% of the investor’s return.
Scale.
eToro’s social trading network is the largest in the world, uniting several million clients of the broker from 140 countries. The trades of the most successful traders are copied by up to 20,000 traders. The scale effect allows for choosing truly the best of the best in the world of trading for copying.
Technological effectiveness.
eToro has developed complex filters for selection of managers, an advanced risk management system and customization of your platform for copy trading.
Transparency.
eToro databases are public, which is why anybody can analyze the financial results of the managers independently. Also social accounts of top managers are available on the platform, which makes it easy to confirm that it is a real person and not a phantom.
How to choose traders to copy on eToro
We have already provided the example of Linda, who was choosing the managers for copying traders. However, the selection process itself requires closer examination, because your financial result directly depends on it. Traders Union experts recommend taking notice of several key points during the selection. Let’s view them using the example of eToro copy trading network.
You can test many filters even without registering on eToro, by simply opening the Top Markets tab in the upper menu of the website and selecting any option from the pop-down menu. The broker’s web terminal will open and there, you will be able to choose the Copy People option in the menu on the left side of the screen.
Past performance is not an indication of future results
Now, let’s go directly to the selection criteria
Assess trader’s performance.
The longer the period in which a trader shows a positive financial result, the higher are the chances that his success is not just luck, but justified by his level of professionalism.
For example, on the eToro copy trading platform, you can filter out the traders, who have registered positive performance results in the period from one month to 2 years. We set the filter to show traders with a return rate of higher than 10% over the period of the last two years. As we can see, even despite a rather strict filter, we received 8,688 results. This means that we have to narrow down our search criteria.
Past performance is not an indication of future results
Assess the risks.
The riskier the strategy that the trader uses, the higher return he can get, but the risks also increase exponentially. You need to find a balance between the risks and return potential. For this, such criteria as maximum losses of the portfolio over the history, the number of closed orders, etc. can be used.
eToro has made this task much easier by developing its own analytical algorithm of risk assessment. Using the filter, you can select traders based on their risk level: low (from 0 to 2 points), average (from 3 to 6) and high (over 6). The general rule is that the riskier the trader’s strategy, the smaller share of your portfolio should be entrusted. Using flexible setting Performance-Risk Score, we selected conservative risk criteria from 2 to 3.
Past performance is not an indication of future results
This allowed us to narrow down the criteria of the ideal trader for copying. Instead of 8,688 results, we got 152 managers with strategies that meet two criteria:
1
Have acceptable risk score.
Show stable positive financial results.
2
eToro offers even deeper settings. In particular, you can select traders that meet the same strict risk criteria, but with higher return rate, setting it at over 30% using the Advanced-Return filter. Even after this very strict selection, we have a choice of 11 managers.
Past performance is not an indication of future results
On the trader’s personal page, you can review his statistics and portfolio.
Past performance is not an indication of future results
The next factor you need to take into account is the number of copiers. If there is no interest towards the trader, there is a reason to be cautious. Maybe he is not as good as it seems.
As we can see, 747 people coping trades of the trader with the username tradefx525, and in the past 7 days he earned 1.22%.
Past performance is not an indication of future results
As an alternative, eToro also offers already diversified and balanced portfolios in different markets. A portfolio is a balance set of assets of several successful managers. The return rate can also be quite impressive, but the entry threshold increases from $200 to $5,000.
Past performance is not an indication of future results
Example of Social trading: How to start copy trading with eToro
After selection of suitable traders for copying, there is one more important decision an investor has to make – to start copying trades of specific traders. It is quite easy to do that on eToro’s copy trading platform. It takes only a couple of steps:
1
From the earlier selected traders, choose several to start copying.
2
Choose the amount you are prepared to spend. It is desirable to diversify your portfolio and start copying trades of at least 3-5 traders. For this, you will need at least $600-1,000.
3
Click COPY on the trader’s preview.
Past performance is not an indication of future results
If you are a registered user on eToro and have deposited the required amount to your account, the system will allow you to select criteria of copying. If you were only testing the system, the registration page will open for you.
Past performance is not an indication of future results
eToro’s demo account, for which the broker provides virtual $100,000 is also excellent for testing the system. We recommend using this opportunity when you start working with eToro. The registration will require only your email, username and password.
On the demo account, just like on the live one, after you click COPY, a window of refined settings will open. There, you will be able to specify the amount you will use to copy the trader and the maximum level of losses, upon reaching which copying will stop automatically.
Past performance is not an indication of future results
After setting up all the criteria, click COPY again.
Through the web applications, you can also start investing into portfolios on eToro. After selecting a specific portfolio, you will see a window with its detailed statistics, current set of assets and price change chart. If everything looks good, click Invest.
Past performance is not an indication of future results
Once again, a window will open for setting up the investment criteria. The minimum investment into a portfolio is $5,000.
Past performance is not an indication of future results
You can monitor financial results, add funds to manage or reduce them, and also unsubscribe from a trader by choosing the Portfolio tab in the left menu. As we can see, in one week our portfolio has already shown a small return. However, it takes at least a month to make a fair assessment of the trader’s performance.
Past performance is not an indication of future results
Noteworthy, we have supplied only one example of how to use filters to start copying trades. You can also use the recommendations of eToro’s editors, who base their advice on their own algorithms, or you can use the multitude of other filters or consider the number of copiers.
Past performance is not an indication of future results
Before starting to copy trades, you need to closely review the rules of eToro:
1
The maximum amount of traders you can copy simultaneously - 100;
2
The minimum amount to invest in a trader - $200;
3
The maximum amount you can invest in one trader - $2,000,000;
4
The minimum amount for a copied trade - $1;
5
All trades of the copied trader will open on the account of the copier. All criteria of the orders and stop losses will also be transferred;
6
You can suspend and renew copying and also change the amount at any moment;
7
You will be able to close a specific copied trade without closing the copy account;
8
Before starting to copy trades, review eToro’s rules in detail on the broker’s website.
eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs. Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. Past performance is not an indication of future results. Trading history presented is less than 5 complete years and may not suffice as basis for investment decision.
Copy trading is a portfolio management service, provided by eToro (Europe) Ltd., which is authorised and regulated by the Cyprus Securities and Exchange Commission. Cryptoassets are volatile instruments which can fluctuate widely in a very short timeframe and therefore are not appropriate for all investors. Other than via CFDs, trading cryptoassets is unregulated and therefore is not supervised by any EU regulatory framework.eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro.
Best Social Trading platform providers for brokers
We have reviewed eToro’s copy trading platform above. This broker uses proprietary software and has developed a true social network of traders. However, in the list of the best brokers for social traders, you probably have noticed that many companies use the systems of third-party providers.
We have compiled a comparative table of the Social Trading Platform Providers, where we specified important features:
The name and the developer
Minimum deposit to start copying
Compatible platforms
Names of the brokers that offer the services of the specified provider.
Also, when compiling the list, we took into consideration the degree of transparency of the statistical data for independent analysis.
Best Social Trading platform providers
Social Trading Provider
Developer
Compatibility with platforms
Minimum deposit
Brokers that use it
MQL5
MetaQuotes
MT4, MT5
$0
AvaTrade, XM, IC Markets, Pepperstone, WForex, HotForex,
The short answer is yes! However, there are a lot ins and outs. If you approach the selection of traders for copying wisely and comply with the risk management rules, it is totally possible to earn a good additional profit.
The return rate of your investment will directly depend on how good your choice of managers will be and could range widely from several percentage points to over 100% annual.
Admittedly, not one investment system in trading provides a guaranteed result. The higher the potential of big return, the higher is the risk of losses.
How became a trader in Social Trading network
Summing up the above information, we can work out a clear algorithm of actions on how to become a trader in a social trading network.
For this you need:
To find a suitable broker and open an account with this broker;
Register on one of the social trading networks, offered by the broker;
Using filters, select the best traders for your goals;
Set up risk management criteria;
Start copying trades of the traders;
Monitor financial results.
And, of course, in order to become a trader, you need to have the desire to secure an additional source of income using stock market instruments and a certain persistence. You need to be prepared that your efforts may not yield the desired results in the first month, try different options and approaches.
Main risks of Social trading platform
Naturally, you need to be prepared for risks when you start copying trades on social trading networks. Let’s list the main ones:
1
Positive financial results of a trader in the past is not a guarantee that they will be repeated in the future. A trader can both improve his performance or suffer a loss. Nobody is immune to making mistakes.
2
High-yielding strategies have higher risks in the financial markets.
3
Unforeseen expenses. In some copy trading systems, traders can charge 10%-50% of the return as a management fee, while others (eToro, for example) do not charge this fee. Some brokers also apply higher spread for copying systems. For example, on AxiTrader, it’s the additional 0.6 pips to the typical spread of the broker. In all cases, you need to take into account the broker’s commission per trade and monitor the amount you earn after deduction of all expenses.
Every broker has a disclaimer with a detailed explanation of the risks of automatic copying.
Summary
We have reviewed the main aspects you need to consider when choosing a social trading platform. Now you are the one to decide whether to start copying traders or not. In any case, you should keep in mind that social trading is just one of the good opportunities of the financial market, but not the magical Eldorado filled with gold.
Expert commentary
Anton Kharitonov,, Traders Union Analyst
«Social trading platforms have proven to be a very convenient and practical way of passive income. The beauty of them is that you can use all the advantages of professional social networks with hundreds of thousands of participants.
Fifteen years ago, in order to find a manager you needed to involve costly intermediaries and the entry threshold was USD 100,000, while now, all you need is a few clicks and a couple hundreds of dollars. At that, you can easily assess the trader’s performance right away, set up risk management criteria. In the past, you would have to sign a pile of documents and go through seven circles of red tape.
Furthermore, copy trading platforms allow to earn profit that is higher than the classic bank deposit, and in some cases even at the level of the top algorithmic funds of the world.
On the other hand, such investment needs to be treated quite coolly. Financial market always carries an element of unpredictability and quite often the chase for big returns turns into big losses. Be careful and don’t place all your eggs in one basket».
FAQ
What is the standard return rate on social trading platforms?
There are no standards here. Everything depends on a huge number of factors: the strategy of
the copied traders, broker’s commission, risk management settings. According to eToro, the
average return rate of top 50 traders in the company’s network in 2019 was 29%. Profitability of
many strategies also largely depends on the market situation.
Can I lose money copying the trades of other traders?
This is a probability, as investment is always linked to financial risks. As a rule, the riskier
the strategy of the broker, the more you can lose copying his trades. However, the chances of
getting a return higher than average also increase.
How do I increase my chances of making a profit?
You need to be realistic. Do not risk too much and follow the recommendations above. They will
help you increase your chances to earn a profit and reduce the probability of big losses.
Which social trading platform is currently the best?
Right now, eToro has the best social trading platform. It has the best ratings in terms of the
choice of signal suppliers, possibilities for analytics and trading conditions.
Andrey Mastykin is an experienced author, editor, and content strategist who has been with Traders Union since 2020. As an editor, he is meticulous about fact-checking and ensuring the accuracy of all information published on the Traders Union platform. Andrey focuses on educating readers about the potential rewards and risks involved in trading financial markets.
He firmly believes that passive investing is a more suitable strategy for most individuals. Andrey's conservative approach and focus on risk management resonate with many readers, making him a trusted source of financial information.
Dr. BJ Johnson is a PhD in English Language and an editor with over 15 years of experience. He earned his degree in English Language in the U.S and the UK. In 2020, Dr. Johnson joined the Traders Union team. Since then, he has created over 100 exclusive articles and edited over 300 articles of other authors.
The topics he covers include trading signals, cryptocurrencies, Forex brokers, stock brokers, expert advisors, binary options. He has also worked on the ratings of brokers and many other materials.
Dr. BJ Johnson’s motto: It always seems impossible until it’s done. You can do it.
Mirjan Hipolito is a journalist and news editor at Traders Union. She is an expert crypto writer with five years of experience in the financial markets. Her specialties are daily market news, price predictions, and Initial Coin Offerings (ICO). Mirjan is a cryptocurrency and stock trader. This deep understanding of the finance sector allows her to create informative and engaging content that helps readers easily navigate the complexities of the crypto world.
Anton Kharitonov,, Traders Union Analyst
«Social trading platforms have proven to be a very convenient and practical way of passive income. The beauty of them is that you can use all the advantages of professional social networks with hundreds of thousands of participants.
Fifteen years ago, in order to find a manager you needed to involve costly intermediaries and the entry threshold was USD 100,000, while now, all you need is a few clicks and a couple hundreds of dollars. At that, you can easily assess the trader’s performance right away, set up risk management criteria. In the past, you would have to sign a pile of documents and go through seven circles of red tape.
Furthermore, copy trading platforms allow to earn profit that is higher than the classic bank deposit, and in some cases even at the level of the top algorithmic funds of the world.
On the other hand, such investment needs to be treated quite coolly. Financial market always carries an element of unpredictability and quite often the chase for big returns turns into big losses. Be careful and don’t place all your eggs in one basket».