VantageFX Social Trading Explained
Social trading has become a popular tool for Forex traders in recent years. Especially new investors, who are on their way to embark on a trading path. Traditionally, investing in financial markets works in such a way that the investor makes his own decision regarding the purchase or sale of assets. He then sends orders to the market through a broker or broker. In addition, he regularly monitors the results of his strategy, possibly adapting it to changing market conditions.
Social trading basically means connecting your account to another trader’s one and copying their trades. It also applies to strategies that other traders use. A lot of Forex brokers offer social trading platforms to their clients, to help them develop and improve.
The first social trading platforms appeared about ten years ago as the computerization of financial markets developed, but the model of cooperation between an active investor (signal provider) and a passive investor has been around for many, many years.
Currently, as passive investors, you can choose from many different platforms that you can use. Strong competition provides relatively lucrative low fees and attractive settlement models, and the choice of signal providers is straightforward. If ten years ago this market was just emerging, today we can say that it has already fully developed its wings.
VantageFX broker is no exception. The company offers a social trading platform that is possible with ZuluTrade, AutoTrade, and DupliTrade. All you need to do is just register on the website, fund your account and start trading with 300+ instruments. It is fast and requires no additional fees.
How Does VantageFX Social Trading Work?
Social trading on VantageFX happens instantly and the process is no complicated. You basically need to follow the following 3 steps:
- Register on the website;
- Deposit money to your account;
- Start trading.
You can use 3 different platforms for social trading:
We will go over them each by each.
ZuluTrade can be called an intermediary. The trick of the trade copying system is that the signal provider makes a profit not from the trader’s profit, but from the spread. The spread at ZuluTrade is larger than that of the broker, and it is this spread, minus the broker’s spread as a commission, that the platform and the manager divide between themselves.
The popularity of ZuluTrade speaks for itself. You can make money on ZuluTrade, but you should be very careful and choose liquidity providers, double-checking the strategy to the smallest detail.
AutoTrade is powered by Myfxbook. It is one of the most popular copying platforms. With it, you have access to more than 90,000 trading systems that you can use to copy trades. Forex trading on VantageFX is easier, as you get access to in-depth information, statistics and analysis. Also, you do not need to download additional software, as everything will be accessible from your browser.
With DupliTrade you can get access to prop traders. By choosing the traders you would like to copy, their trades will automatically duplicate on MT4 and MT5 accounts. It is necessary to fund your account with at least $2000. After that, you will be able to select up to 12 trading systems.
Available Trading Platforms
While we have already mentioned 3 helpful platforms – ZuluTrade, AutoTrade and DupliTrade – we should also have a look at MetaTrader 4 and 5. Both of these platforms are available on the broker’s website, and they will help you during social trading. As soon as you choose trades, they will be automatically duplicated. VantageFX app is also available.
Leverage is a borrowed capital that can heighten profits and losses. This tool should be used wisely and generally it is offered to experienced trailers. The leverage rate on VantageFX starts from 1:100 and the maximum can be 1:500. Keep in mind that the latter applies only to approved accounts. However, if you want to increase the leverage rate, even more, you can contact the broker directly and submit a leverage request. Once again, increased leverage can result in significant losses.
If you start trading with VantageFX you will get access to the lowest spreads on the market. Depending on the type of account, spreads vary. For example on standard accounts spreads start from 1.4 pips, while on raw ECN accounts they start from 0.0. Spread is the difference between the bid and ask price and frequently they are seen as commission fees.
Pros & Cons of VantageFX Social Trading
Social trading has a lot of advantages and we can also notice some disadvantages. We will have a closer look at each of them below:
Let’s take a look at why social trading can be an attractive alternative to traditional investing or mutual funds for many investors.
Convenience of investment
Compared to independent investing, where you have to analyze the market yourself, social trading offers huge time savings. In fact, the analysis is limited to the choice of the signal provider, whose services you will use.
Great flexibility in creating your own portfolio
Among the signal providers whose signals you will copy, you can choose from hundreds, if not thousands, of different investment strategies. The degree of differentiation of these strategies goes far beyond what the highly regulated mutual fund market offers.
For example, mutual funds rarely sell shortly or invest in securities using leverage. As for signal providers, there are no restrictions that limit the range of investment instruments and instruments available.
Simple and transparent payment model
Platforms that offer social trading features have a very simple billing system. You usually just pay a fixed recurring fee (like a monthly subscription) to access the signals of the chosen provider.
As investors, we are well aware that there are no roses without thorns. What arguments can we say against social trading?
Poor understanding of your own wallet
By entrusting an external vendor with making decisions about buying and selling assets, we rob ourselves of our understanding of what constitutes our portfolio. Typically, vendors describe the logic behind their strategies in a superficial and cryptic manner, as this is their competitive advantage. After all, if they shared this information, no one would want to pay for their knowledge.
By entrusting decision-making to a supplier, you deliberately choose to delegate decision-making about what assets will be in your portfolio. Without independent analysis, it is difficult to understand the current market situation and feel comfortable in the event of significant fluctuations in the value of the portfolio.
Social trading critics also argue that it includes additional fees that are absent when investing alone or negligible when investing through inexpensive passive ETFs. In addition, these fees are often paid by subscription, which means that people with less capital dedicated to the investment burden have a disproportionate burden.
FAQ on VantageFX Social Trading
What is a social trading platform on VantageFX?
The social trading platform on VantageFX is a unique platform that will guide you through trading. With this tool, you will be able to copy trades of other traders, which in the long run will also benefit you. Gaining experience is pivotal for success in the FX industry.