The Best Social Trading Platforms in 2023
If you have been looking for a forex trading platform to use over the past few years, you may have noticed the growing popularity of social trading. Social trading has been integrated into many existing popular FX platforms, and has become a major selling feature for quite a few of them.
But what is social trading? Are there different types of social trading platforms? How do you use them to become a more profitable trader? In this article, you will learn all you need to know about social trading networks to become a successful trader. Let’s go ahead and get started by talking about what social trading platforms are.
What Are Social Trading Platforms?
A social trading platform, sometimes called a social trading network, is simply a platform which allows traders to copy one another in some form or fashion. Social trading may also be referred to as copy trading.
Technically, there are two different types of social trading platforms:
- Social networks dedicated 100% to the sharing of trading information.
- General-purpose forex trading platforms which have social features integrated directly into their interfaces.
This guide will be focusing on the latter, but you may very well want to look into the former as well. You may find that combining social features from different services helps you get the edge you need while trading.
What Are the Benefits of Social Trading Platforms?
The features of social trading platforms can vary quite a bit—something you’ll be reading about shortly. Likewise, the benefits of social trading platform brokers can vary as well. Some of the advantages may include:
- Build up your account balance by copying a more skillful trader while you work on developing your own system.
- Augment your own strategies by checking for confluence with successful traders.
- Take some of the hard work out of trading (some traders copy others exclusively and never develop their own strategies).
- Share your trade setups and ask questions of more knowledgeable traders.
- Pay it forward once your own strategies start paying off. Share your knowledge, experience and setups with less experienced traders who can profit from them.
- Be a part of a trading community. Get to know others who share your forex ambitions and who take a similar approach to their trading.
History of Social Trading Platforms
The roots of social trading go back to 2005 or thereabouts. At that time, auto-trading already existed. With auto-trading, investors subscribe to a service which trades on their behalf, usually based off of a set of algorithms (auto-trading programs are also known as trading robots).
Social trading was an outgrowth of that. A company called Tradency came up with the idea of doing something similar, but with manually-generated trades instead of algorithmically-generated setups. They dubbed the system Mirror Trader and invited those who wished to share their trades to submit their strategies and records for consideration.
Nowadays, copy trading usually doesn’t require an application process like this. If you want to share your setups, you just sign up to participate on your platform (it may be as simple as checking a box), and your trades are made public.
If you want to copy trades, you can usually select a trader you want to follow, and the platform will automatically mirror that investor’s trades going forward. More on this later.
How to Use Social Trading Platforms
Exactly how to use a social trading platform depends on the setup and features. For this reason, you should view the tutorial your broker or platform makes available to you before you attempt to use the features.
Here are a few possible ways to use social trading, depending on the platform you choose. In the copy trading interface, browse through the traders and check out their histories. If you find one you want to follow, select them and have your platform automatically mirror their trades. This works just like auto-trading.
Alternately, you could follow along with the trades yourself and manually duplicate them if and when you wish. That way you are benefiting from the other trader’s knowledge, but you are not leaning 100% on their judgement.
If there are additional social features (see below), watch the social trading platform demo or read the social trading user guide to find out how to use them.
Note that if a site says it offers copy trading, it is more likely that additional social features are not available. If it says it offers social trading, it may or may not have added features.
Wondering about social trading platform costs? Usually the price of this service comes in the form of the spread or trading commissions on the platform—so it is simply embedded with the other costs. As you pay nothing extra for it (usually), you may think of it as free.
You also may be wondering about social trading platform requirements. Making sure you can use a social trading network usually comes down to being able to afford the initial minimum deposit and being able to run the software on your system. If you meet those basic requirements, you should be good to go.
Features to Look for in Social Trading Platforms
As previously mentioned, the features in social trading platforms can be very basic (simple copy trading) or they can be more sophisticated. While some traders may be perfectly happy simply mirroring trades automatically, extra social features can really go a long way toward enhancing your trading experience. Here is what to look for:
Ease-of-Use and Automation
Whether a social platform includes only basic features, or it has a lot of bells and whistles, you want it to be easy to navigate and use. If automation is available, selecting traders to copy and turning it on and off should be simple, fast, and easy.
Chat has become a common social trading feature. It is definitely something to look for, because it can open a lot of doors. Through chat, you have a chance to get help from more experienced traders, and to offer it to newbies. You can meet like-minded people with whom you can cooperate directly in real-time.
The quality of the chat will depend very much on who is online at any given time. I suggest checking it out a few times, so you can get a feel for the user base and what the collaborative culture is like on that platform. If you like what you see, you can open an account and chime in.
Some social trading platforms include other features to facilitate collaboration such as chart sharing. Chart sharing tools allow you to make notes and highlight indicators or bars on your chart and then quickly and easily share them with users on chat (or save them for your own future reference).
This feature can be a huge help. If you are looking for help with your trading or you want to help someone else, being able to share your charts with ease can save you and other users a ton of time and effort. You may derive as much value or more from this as you do from copying trades directly.
What Forex Brokers Are Offering Social Trading Platforms?
Now you know all about the features and benefits of social trading online. So where can you actually take advantage of these features?
There are also general-purpose forex trading platforms which include social features. A great example is CMC, which includes a sophisticated chart forum with a chat feature that you can use right inside the trading area. In this way you can view and edit your charts while chatting. You can also export your analysis or import data from other traders in a single click.
Social trading is a powerful feature which can help you out in numerous ways no matter what stage you are at with your trading career. Whether you are just starting out and are looking for a shortcut to making some solid trades while you grow your account, or you are an intermediate or advanced trader looking to further develop your strategies or teach other investors, social trading can help you take your trading to the next level.
Q: What is the best way to use a social trading platform for success?
A: This is really up to you, but it is advisable to use it to improve your own strategies and augment your methods—not replace your own hard work.
If you rely on another person’s trades 100%, chances are good that it will backfire on you sooner or later. The best way to leverage social trading is to use it to assist you in reaching your goals, but not to rely on it so heavily that you lose contact with your own trading.
What is the absolute best value you could get from social trading? Get to know other investors. Find people who are using strategies like yours, and who can help you develop your edge. Use chat and chart sharing features to help others in return. Build a network of connections who will be there for you when you need them.
It is true that you are probably going to do most trading on your own—but investing in a vacuum is pretty tough. Oftentimes it will be another trader who will help you achieve the next big breakthrough you need. So take advantage of social opportunities, and explore the numerous possibilities which are open to you. You never know where they might lead.
Q: What are some things to avoid while doing social trading?
A: One of the best social trading platform tips I can give you is to remind you that not everyone who shares their trades knows what they are doing. Remember, many platforms do not even have an application process for this anymore, so quality can range quite a bit. There are some fabulous traders out there sharing their setups, but there are also a lot of folks who are not at all profitable.
A good idea is to review trading histories very carefully before you decide to copy a certain trader. Also keep in mind that circumstances can change. A trader who has been doing great for the past few weeks could have an extended losing streak next week.
So if you turn on auto-trading, just make sure that you follow up with what is going on in your account. Do not just ‘set and forget.’ If you notice the trades have taken a turn for the worse, deactivate the auto setting for the time being and follow along manually if you like.
Q: What is the best social trading platform right now?
A: If you are looking for social trading platform reviews, there really are a lot of great options out there. Check out the reviews of our top recommended brokers in the table at the top of the page. You will discover that many of them offer social trading features. If you need a good starting point, click through the links shared earlier.