What is a social trading platform and how to use it

Social Trading Platforms pros and cons

Combining the features of a social network and copy trading revolutionized Forex trading and helped solve several important issues for the beginners at once:

• A large number of experienced traders you can borrow strategies and learn from are concentrated in one place;

  
• Copy trading offers an easier threshold on the Forex market. You don’t need to spent a lot of time learning and gaining trading experience before you start earning money;

  
• Communication and discussion of the market news provide for a good assessment of opinions on the market, which is quite useful for making trading decisions both for the professionals and novice traders.

  

There is one major drawback of Forex social trading – the profit of the traders in the past does not guarantee the same outcome in the future. Even experienced traders, which have registered profit for years, may start losing money. Accordingly, all subscribers of the traders on the social platform can both earn a profit and suffer a loss.

Social Trading Pros and Cons

Best social trading platforms

Traders Union experts have compiled a list of the top social trading platforms, which includes the brokers that offer beneficial trading conditions, reliability, and a wide range of signal suppliers to copy.

eToro Social trading platform’s key features review

Let’s review the key features of social trading networks using the example of eToro which offers the top social trading network. Experts ranked eToro first in 2023 thanks to a number of important advantages the broker offers:

eToro – a social networks for traders

eToro copy trading platform strongly resembles a social network, even visually. As soon as you access the home page you will see profiles of the most popular members. The focus of the network on copy trading is also quite evident. For this reason, the first page features the most successful traders that a user can copy.

Past performance is not an indication of future results.

Same as on any social media, every user has a profile, in which he/she shares personal information, keeps a blog. Users can comment, like and share the posts.

Past performance is not an indication of future results.

Since it is a network for traders, the profiles also feature key trading information about the users: their trading performance, portfolio, risk criteria and a lot of other important information, which is required to understand just how successful a trader is.

Past performance is not an indication of future results.

Copy trading on eToro

Copy trading is an important feature of any social trading platform. For many novice traders, an opportunity to copy professionals is the most valuable feature.

eToro offers a copy trading service on its proprietary platform titled Copy Trader. It allows to quickly find and start copying the most successful traders out of over 100,000 strategy suppliers.

There are two ways to search for a trader: use the broker’s recommendations or filters. You can see the broker’s recommendations as soon as you access the home page. The traders are chosen by eToro’s editors and algorithms using the following criteria:

Trader selection using the filters works quite well on eToro. You can set up a large number of criteria in the basic and extended search settings: return rate for any period, maximum slippages, strategy risk level, number of subscribers, the amount of funds under management, etc.

Past performance is not an indication of future results.

Once the choice has been made, all you need to do is click Copy in the trader’s profile, and specify the amount you want to allocate to copy this trader’s trades and the slippage at which copying will be automatically stopped in the pop-up window.

You can subscribe to dozens of traders this way. However, you should take into consideration that the minimum investment amount for copy trading on eToro is $500 per 1 signal supplier.

Social Trading Platforms Providers

In the table of the top social trading platforms, you will see that some brokers use the services of third-party suppliers. They are called social trading platform providers. We have compiled a comparative table of the four most popular providers as of today, with comparison of their key criteria:

Can I use social trading on Forex to earn money?

Yes, social trading platforms on Forex have the features that enable users to earn money.

Novice traders can copy the most successful traders on the platform, thus potentially ensuring an additional income at the level of a professional trader.

Professional traders can also earn additional income. On many copy trading platforms, the managers charge a commission based on return.

On eToro, the most successful traders do not charge subscribers with a fee, instead earning money through working with the broker.

However, one should keep in mind that just like any area of investment, social trading on Forex involves risks. Good results of the traders in the past do not guarantee the same results in the future, which is why by copying you can both earn money and suffer a loss.

Expert review

Social Trading Platforms reviews

• 
  Alberto Jimenez, 35, Madrid, Trader

  I grew as a trader thanks to the social trading platforms. I first registered on eToro five years ago. At first, I only studied how professionals worked, copied their trades. When I gained some experience, I opened the profile for copying. Generally speaking, I’d advise all novice traders to try this. You don’t have to copy traders, you can simply watch and learn what works on the market now, how the professionals trade.

• 
  Natalie Cooper, 29, IT Manager

  I am interested in social trading purely as a source of additional income. I’m not going to trade on my own, because that's totally not my thing. I’ve been working on the RoboForex platform for over a year and the results have been great so far. I don’t know how it will go in the future, but I’ve had it quite easy so far.

• 
  Patrick Rasmussen, 48, Oslo, Private Investor

  My experience of social trading is rather negative. Many brokers try to earn on it by adding a markup to the spread. This is why, even if a trader makes a profit, you can still slip. Add to that the fact the platforms always show the best traders first, but nobody explains that only a couple percent of the traders have a stable return over the years. Nobody knows when a successful trader will start to slip…

• 
  Fritz Heider, 22, Berlin, Student

  You simply need to stay realistic. Many seek a source of rapid enrichment in the social trading platforms, but if you subscribe to cautious and experienced traders, it will be difficult to gain more than 20-30% return. If you want a casino, buy crypto, IMHO.