Best Social Trading Platform 2022 – Beginners Guide

Social trading platform, or copy trading, consists of automatically or manually copying the trading positions of other traders, which involves risk but has the tremendous advantage of being able to replicate the performance of the most talented traders. There are a handful of trading systems that offer social trading. You can choose any one of them to begin social trading.

In this guide, we will list the top social trading platforms. This guide will help the beginners to take the decision wisely. This guide walks you through the pros and cons of social trading. We will also list out the pros and cons of the trading platforms.

What is social trading?

Social Trading was born around 2005, and initially, it was possible to copy the positions of traders connected to us through the algorithms or EAs of the MT4 trading platform.

The first historical player in the field is Zulutrade, but eToro has since established itself as a global benchmark in social trading and copy trading. From its inception, social trading has exploded and now has many traders.

In fact, according to a survey conducted in 2020, 1 in 3 says that investing or trading manually is too complex and easier to copy another trader’s trades. Also, 1 in 4 investors plans to try social trading in the short term. Finally, according to market research, social trading platforms are expected to grow by nearly 50% by 2025.

Also read: Our complete beginners guide to Social Trading.

How does social trading work?

Social trading is termed as automatically or manually copying the positions of other traders. After analyzing and observing the performance of many operators, we will select them in advance. Of course, the positions are proportionally replicated. In addition, most of the time associated with stops and restrictions is also copied.

Social trading platforms like eToro provide a search interface that allows you to rank different traders to copy based on performance, age, regularity, or other criteria. Therefore, the first step in implementing social trading is to analyze the performance of traders on the platform.

You need to know whether to prioritize safety or potential benefits. We know that risk levels often correlate with potential returns. You should also be interested in the markets in which the traders being copied are operating. That way, you know if the market is right for your investment goals.

What can you negotiate with social trading?

A trader that can be copied to a social trading platform can trade many different markets at the same time or specialize in a particular market. Discover the most popular markets in the world of social trading and copy trading below.

Trade stocks with social trading

Stock Trading with social trading

Buying stock on the stock market is like owning part of a company. The value of the stock itself can rise or fall, but dividends must also be considered. The stock market is arguably the best market for long-term investing, and many studies have shown that investing in stocks is almost always profitable.

Some behaviors are riskier than others, depending on the size, industry, or economic situation of a company. Therefore, it is difficult to make the right choice among thousands of stocks. This is where social trading makes sense as it allows experts to choose the best stocks to invest in.

Trade ETFs with social trading

Exchange-Traded Funds (ETFs) are mutual funds, which consist mainly of stocks that are traded continuously during trading hours and can be traded in real-time promotions. These funds may be linked to indices such as the CAC 40, NYSE, or FTSE, or they may follow a specific investment subject, such as biotech or fair trade-respecting companies. ETFs, like stocks, are suitable for long-term investments. However, the risk profile of ETFs varies widely and, like stocks, it can be difficult for beginners to make the right decision.

Trade cryptocurrencies with social trading

Trading Cryptocurrency with social trading

Cryptocurrencies, whose undisputed star is Bitcoin, is a new asset class that is considered relatively risky. Some see this as a long-term investment but expect cryptocurrencies to one day replace the national currency. The current reality is that their volatility makes them more suitable for short-term trading than long-term investments.

The movements of digital currencies are often violent and unpredictable, and many beginners lose all their crypto capital in a matter of days. Therefore, it is often better for beginners to rely on the expertise of cryptocurrency experts to copy the trading location to buy cryptocurrency.

Trade commodities with social trading

Gold and oil, the two commodities traded the most every day by traders around the world, are volatile assets that can be useful for short-, medium- or long-term trading.

However, these are markets that respond to many macroeconomic factors that are sometimes difficult to pin down, and copying the position of experienced traders on social trading platforms is usually the most profitable solution for beginners.

Also read: How to invest in Gold UK

Forex currencies with social trading

A forex market is a virtual place where currencies or foreign currencies are traded. It is the world’s largest financial market, trading more than $4 trillion per day. It is often the preferred market for very short-term traders trading during the day or scalping.

However, like commodities, currencies react to many factors that are difficult for beginners to find. Therefore, trading forex through social trading platforms is preferable for beginners who expect to gain sufficient experience to make their own forex trading decisions.

Best Social Trading Platform 2022

Many trading platforms today offer social trading. So navigation can be complicated. We are considering these 4 as the best social trading platforms-

  1. eToro
  2. AvaTrade
  3. XTB
  4. Alvexo

Best Social Trading Platform 2022 Reviewed

1. eToro

The eToro trading site has been operating since 2007 and has become the world’s leading social trading site with millions of registered users.

eToro is based in Cyprus and is regulated by CySEC for European traders. As a result, the eToro social trading site is very reliable. eToro is very popular thanks to its very accessible and easy-to-use trading platform, making it ideal for beginners.

In addition, eToro, the world’s leading social trading provider, offers CopyTrader and CopyPortfolios tools, advanced social trading products that make eToro a great option to start trading. eToro enables social trading on a variety of financial markets including stocks, stock indices, currencies, commodities, cryptocurrencies, and ETFs. Free stock trading and the ability to purchase real stocks and cryptocurrencies attract the most experienced traders in addition to trading CFDs.

Pros

  • Regulated, accredited, and established brokers
  • Intuitive and easy-to-use social trading site for beginners
  • Provides ergonomic business applications
  • Very low trading rates and spreads
  • 0% commission on stock

Cons

  • Lack of advanced trading tools
  • $5 withdrawal fee

2. AvaTrade

AvaTrade Review 2022, Safety, Platforms and Fees | FX Empire

AvaTrade is an Irish social trading site regulated by the Central Bank of Ireland. It claims to have over 200,000 clients, making it a great online broker. AvaTrade traders can use the MetaTrader 4 and MetaTrader 5 platforms in addition to the AvaTradeGo mobile app. The broker also offers an automated trading platform, social trading, and options trading app.

AvaTrade brokers offer social trading through a dedicated application that allows traders to automatically trade, discuss and copy other investors. AvaTrade offers a variety of trading instruments including Forex, Stocks, Commodities, Equity Indices, Bonds, Cryptocurrencies, ETFs, and Options.

Pros

  • Regulated social trading sites in Europe
  • Social trading that you can take with you wherever you go through a dedicated app
  • Trade Education Articles and Tutorials
  • Free deposit and withdrawal through various payment methods

Cons

  • Not a desktop social trading site
  • High inactivity rate

3. XTB

XTB Online Trading (XTB) Review 2020

XTB is a well-established trading platform with offices in over 13 countries, including France. Founded in 2015, it has more than 170,000 customers worldwide. The website is regulated by the FCA.

XTB offers trading on the xStation 5 platform and the xStation Mobile application. The website offers its clients over 3000 assets that can be traded. Forex, Indices, Commodities, Spot Stocks, ETFs, and Cryptocurrencies markets are available on the XTB platform.

Pros

  • Well-known business sites
  • Forex Spread Reduction
  • Intuitive trading app
  • Good market research and analysis services

Cons

  • Relatively high fees for stock CFDs
  • Limited range of instruments
  • Unresponsive customer service

4. Alvexo

Alvexo™ is a Regulated Online Trading Brokerage| Alvexo™

Alvexo is a relatively new commercial site that has been around since 2014. It is based in Cyprus and is growing very fast. Alvexo is striving to be one of the best trading sites, but it still has a long way to go to catch up with a leader like eToro.

The website offers a simple and easy-to-use platform, including MT4. Clients have access to a variety of markets including stocks, ETFs, indices, currencies, commodities, and cryptocurrencies.

Pros

  • No brokerage fees for 3 accounts except for spreads
  • Extensive assets
  • User-friendly broker

Cons

  • Product limits for Standard, Gold, and Premium accounts
  • High minimum deposit

How to start Social Trading?

The following sections explain these different steps in more detail as part of a comprehensive tutorial on how to start social trading using the example of the online broker eToro, the undisputed market leader in this field.

Step 1 – Open your eToro account

To get started, click the “Sign up now” button to go to the eToro website for a quick and easy registration where you can open an account. All you need to do is enter your connection information along with your username, email, and password on the registration page.

eToro

You will also need to confirm that you agree to the Terms of Use and Privacy Policy, then click “Create Account”. These quick and easy steps are enough to access the eToro social trading platform. However, if you want to invest and copy other investors, you will need to fill out a profile. To do this, click on “Full Profile” in the left menu and answer the questions.

Step 2- Verify the account

At the end of the survey, you will be asked to verify your identity with your ID and address that can prove your address. After that, your real money account will be ready to receive funds.

Step 3- Deposit the funds

To deposit funds and deposit funds to your social trading account, you must click the “Deposit” button at the bottom of the left menu.

You will then need to enter the amount to be deposited into your account and currency. Finally, you need to select your preferred payment method and the corresponding information. Click Submit to complete the transaction.

Step 4- Start Social Trading

Once your account is verified and funded, you can start social trading. To get started, go to the People section of the left menu. You can then go to the page with all sellers to track and copy the sellers.

Each trader has his/her profile and nickname, name, return over the year, risk rating, number of people who have followed him, and popularity over the past 7 days. Hover your mouse over the profile you are interested in to read a brief description of the reseller. Once you find the investor you want to copy, click “Copy” in the profile field.

Copy top-performing crypto traders

Then enter the amount you want to invest and the threshold for loss at which you no longer want to follow this investor. Finally, click “Copy” to confirm.

Advantages of Social Trading

As you can see, social trading has many advantages, especially for beginners. Let’s use this section to summarize.

Leverage the expertise of experts

Of course, the first advantage of social trading is that you can replicate the trading performance by copying the positions of experienced traders. Learning to trade takes time and money, and many want to make money by trading without training in technical, fundamental analysis, and risk management.

Thousands of distributors copy

Social trading platforms like eToro have hundreds of traders copying them. So you have a lot of choices and the platform’s search function allows you to rank according to various criteria, so you can choose the traders who will follow the strategy that best suits your expectations in terms of risk appetite and potential return. It is also possible to create a “trader portfolio” and at the same time follow other traders and allocate them to each part of the account capital.

Watch and learn

If some people are satisfied with copying trader positions and observing the results, they may be more active by trying to understand the logic and rationale behind trader positions. So, over time you will understand the strategies of different traders, and ultimately you will be able to develop your trading methods and make your own investment decisions, even if it means continuing social trading with part of your capital.

Better assessment of possible returns

Finally, as long as the detailed historical performance of the trader to be copied is presented on social trading platforms, it is very easy for us to estimate how much money we can expect to follow a particular trader by reporting ourselves our average monthly income.

What is the purpose of Social trading?

Social trading is especially popular with beginners for obvious reasons. However, copy trading can be useful for different trader profiles.

  • If you want to make money in the market without learning to trade, the most convenient and economical solution is by far social trading, which can replicate the performance of experienced traders.
  • For those new to trading who want to learn how to trade, copying a trader’s positions will help them better understand their strategies in addition to their trading training. You can also earn money from copied locations while you wait to take your own.
  • Even beginners or non-newbies to manual trading may be interested in social trading for diversification reasons to reduce risk.
  • More experienced investors can study the strategies of traders who copy and use them as inspiration for their strategies.

Tips for the beginners to start social trading

Here are some basic tips to get you started with copy trading.

Choose your social trading platform carefully

Investors need to know which assets they are investing in (stock indices, currency pairs, CFDs) and which platforms support them. Some platforms offer demo accounts, some do not. Also, some platforms offer automatic trading while others only offer manual options.  Ask other social traders on the forums to find out what the most popular new platforms are. However, we can already say that in most cases we would designate the current market leader eToro as the best option.

Start a demo account

Whether you’re a beginner or not it is best to start with a demo account. The demo account allows you to observe the strategies of different traders and learn how to rank different opinions through independent research and observation. You can also study how traders think and trade and choose which ones to follow. With a demo trading account, you will have plenty of time to familiarize yourself with the site and how to use it and learn how to get the most out of your chosen social trading platform.

Also read: Best Forex Demo Accounts

Don’t follow too few or too many traders

Social trading always carries certain risks. An imitated trader needs to perform well, but no one can be perfect. As a result, the traders you follow can sometimes make the wrong decisions just like other investors. Your risk is to follow the wrong operator. Traders who often make big profits regularly suffer big losses and generate very little net profit.

Follow the trader’s strategy

Verified traders can incorporate information into their trading strategies, even if they appear automatically. Traders have personal issues and stress points that can affect their trading decisions and strategies. Some traders may be overconfident and pay less attention to news and advice.

If your strategy is questionable or your analysis explanations are confusing or irrational, move on to another trader. The traders you follow have to choose the assets and trades, and your job is to select the traders.

Think long-term investments, not quick returns

Social trading is an attractive proposition for those looking for fast payments. As with any investment, alternative or not, the best chance of success comes from long-term planning with accumulated profits. Investing in extremely high payouts in the shortest possible time maximizes risk and minimizes success.

Conclusion

Social trading has many advantages. While beginners benefit the most, social trading can be useful for a variety of merchant profiles. Copying and observing the positions of experienced traders is not just making money by replicating their performance. You can also learn to trade by looking at the strategies underlying the positions.

Several online brokers are offering social trading platforms, but there is no denying that eToro is a leader in this field. Many traders can copy it, its advanced search feature ranks the best experts, and most importantly, it’s practical and easy to use.

Frequently Asked Questions

Is social trading risky?

Social trading involves risks. However, the experience of imitative traders reduces the risk compared to traditional trading, especially for beginners. This is better than making business decisions on your own without experience.

Is social trading suitable for beginners?

People new to trading are usually most interested in social trading. You can benefit from the experience of successful traders. This is while learning by tracking and analyzing the copied location.

How much return is possible with social trading?

It depends on the trader you are looking for, but never forget that risk and return go together. High-performing traders often take big risks. Conversely, some traders are less positive, but their profits are limited.

What are the biggest advantages of social trading?

The great thing about social trading is that you can copy professional traders’ positions for free.

How much money should I invest in social trading?

The minimum investment required to run social trading is the minimum required to open an account with the broker. For example, with eToro, you can open an account and start trading social media for just $200.

What is the best social trading platform?

eToro is the best social trading broker. Thousands of resellers offer copies on this platform. It also offers advanced sorting features to help you select a dealer to copy. Finally, you will find an intuitive platform to learn quickly.