Learn what social trading is and how it works from examples.Find out a definition of copy trading that can help you earnmoney on Forex and other financial markets.
Social trading is a form of investment that first started to gainpopularity in 2010 with the launch of eToro’s platform. The socialtrading platforms follow the principles of social media:communication, exchange of knowledge, mutual help, and partnership.
Copy trading systems are used as an add-in to the social tradingplatforms on Forex. They enable the members of the community to earnmoney jointly.
Novice traders without knowledge and experience have anopportunity to subscribe to the signals of professional tradersand copy their trades either manually or automatically.
In exchange, expert traders gain a high social status in thecommunity, and as a rule some commission from the return.
The value of social trading platforms on Forex is extremely high forthe beginners. They have an opportunity to:
Earn money while making the first steps in the market
Study the strategies of the top professionals
Communicate and exchange experience, all in one placeA large part of the community members use the platform purely as asource of additional passive income.
Noteworthy, it doesn’t require a big capital to start working in themajority of Forex social trading platforms. As a rule, you can startfrom $100 - $1,000.
The biggest drawback of Forex social trading is that the novicetraders are drawn by the high profits, while the results of themanagers in the past do not guarantee the same outcomes in thefuture. Losses also happen.
Social trading works like a well-oiled machine, in which thebrokers, platforms, novice traders and professionals are the keyplayers.
Let’s take a look at how the cooperation works:
Is a professional network that serves as a link between thebeginners and expert traders in trading, a place forcommunication and information exchange. Often, it stronglyresembles a traditional social network on the outside withfeatures like posting information, commenting, liking posts,exchanging messages.
Act as signal suppliers. They trade on their account, allowingthe novice traders to copy their trades. On some platforms, theycan also have their own professional blog.
Are the main users of the platforms. They have an opportunity tocopy the trades of professionals, communicate and copy signalsof expert traders at the established ratio on their own account.
Ensures order execution, access to instruments for copying. Thebenefit for the broker is the increase of trading activity andattraction of new customers. Some brokers, like eToro, FXTM,RoboForex, have proprietary social trading platforms, althoughthe majority offer their customers the services of third-partyproviders.
is a supplier of social trading software, a platform that allowsto unite customers of different brokers in one place. The mostpopular providers are MQL5, ZuluTrade, DupliTrade.
There are several ways to earn money on social and copy tradingplatforms.
Can earn by copying the trades of professionals. As a rule, theycan choose several managers at once, thus diversifying theirportfolio.
Can earn from copying commissions. As a ruled, it’s a specifiedpercentage of profit, which could range from 2-5% to 50%. eToroplatform does not have a copying commission for investors, whilethe most successful managers receive a reward under the broker’sprogram.
A lot depends on the broker and the platform that you’ve chosen. Youshould consider the platforms with regulation in one of thecountries with a developed legal system (for example the UK, Cyprus,Australia, USA) and statistics that are transparent for analysis.
Social trading on Forex from the world’s top brokers is safe and thekey risks are, as a rule, lie in the trading itself. However, alsoscam brokers may offer copy trading, seeing as the popularity of theservice is growing. Scam brokers are, as a rule, not regulated, donot specify the risks and overstate the potential of the profit.
Social trading platforms on Forex have opened entirely newpossibilities for the millions of participants. Previously, onlyexperienced professionals, who dedicated years to studying andgaining experience, could earn a profit on the Forex market,while now also novice traders can earn just as much.
In the wider meaning, the networks helped consolidate apreviously fragmented trader community, ensure quicker exchangeof information and latest knowledge. After all, the beginnersare not the only ones interested in learning how theprofessionals trade; many expert traders wouldn’t mind peekingat the work of their colleagues in search of ideas.
David Palmer, 45, Austin, Trader
As a trader, I grew on the eToro platform. First, I simplycopied the trades of experienced colleagues, and learned, andthen I started to trade on my own, earning a steady profit. Ithink it’s time for me to open my profile to subscribers.
Naomi Fletcher, 35, Manchester, Investor
The idea is great, although not all platforms do it smoothlyin reality. It is true, you don’t have to pay the managers oneToro, but on the majority of other networks, they squeeze youdry – the broker has an increased spread and the managers takeup to half of your profit! As a result, you won’t even breakeven with these kinds of demands.
Mehmet Marangoz, 42, İstanbul, İnterpreter
For me, social trading is a possibility to earn passive incomewithout spending days at the screen. They’ve come up with avery convenient format. The return rate is naturally lowerthan the brokers promise in their ads, but it is totally realto earn 15-30% annual profit.
You can register and start communicating for free. In order tostart copying traders, different platforms have differentminimum amounts. On average, it’s from$100 to $5,000.
We recommend that you consider eToro, AvaTrade, RoboForex, and FXTM.
The main risks arise when you start copying other traders. Thething is that great results of a trader in the past do notguarantee the same outcomes in the future. Also, you shouldstay away from little-known suppliers of services that do nothold the license of a top regulator.
A trading system is a set of rules and algorithms that a trader uses to make trading decisions. It can be based on fundamental analysis, technical analysis, or a combination of both.
An investor is an individual, who invests money in an asset with the expectation that its value would appreciate in the future. The asset can be anything, including a bond, debenture, mutual fund, equity, gold, silver, exchange-traded funds (ETFs), and real-estate property.
Social trading is a form of online trading that allows individual traders to observe and replicate the trading strategies of more experienced and successful traders. It combines elements of social networking and financial trading, enabling traders to connect, share, and follow each other's trades on trading platforms.
Copy trading is an investing tactic where traders replicate the trading strategies of more experienced traders, automatically mirroring their trades in their own accounts to potentially achieve similar results.
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