Social Trading – Guide

Do you know that novice traders can copy the best traders to grow their wealth effortlessly? Until a few years ago, any investor absolutely had to be able to analyze stock market charts and develop strategies to anticipate the financial markets. Social trading is therefore proving to be a “more reliable” approach to investing in the financial markets, even without skills or experience.

Some think that community trading would be a joke, an instrument of deception to encourage traders to invest massively. In our Social trading reviews: we explain everything you need to know about this new way of trading.  

What is Social Trading?

Definition Social trading: This is a technique by which financial investors base their decision entirely (or partially) on information produced by "successful traders" in online trading networks (traditional social networks and/or trading platforms).

Of this definition of social trading, it appears that the trader no longer relies solely (or not at all) on the traditional methods of technical and fundamental analysis to position himself. It is therefore a new way of analyzing the market. This form of analysis is also called social financial analysis.

Requiring little or almost no knowledge of the financial markets, the success of collective trading lies in an adequate selection of traders to follow. The World Economic Forum describes it as a sophisticated and inexpensive alternative to traditional wealth advisers.

The process is therefore simple: investors observe successful traders in order to compare and reproduce their movements and transactions to optimize their gains.

Best Brokers for Social Trading

Are you looking for the Best social trading site to start with? We've selected 6 of the best regulated brokers for you to get started safely.

eToro : the World Leader in Community Trading Networks

With a network of several million users from 140 countries, eToro was able to take advantage of their skills and experience to set up real practical and effective trading tools. eToro incorporates many new and innovative community trading features.

These social features go well beyond the trading platform itself. eToro creates the Popular Investor program to build a strong community by inspiring successful traders to share their experience. To do this, it rewards any trader who is copied regardless of their country of origin. The more copiers you have, the bigger the reward. The bonuses that the popular investor (copied trader) receives are added to his trading profits and can reach up to 2% of his assets under management (AUM). The popular investor therefore receives a second income whatever their financial situation.

The social news feed, a unique feature eToro...

eToro also offers a personalized social feed. It allows you to follow the latest news on financial instruments and your favorite traders. You can also interact with other traders in the community; open a discussion; make publications; tag other traders or financial instruments; And much more.

The broker is also expanding its coverage and keen to keep its social channels active. Indeed, eToro places a emphasis on knowledge sharing and open discussions. The Broker therefore offers its users the possibility of sharing their actions and trading decisions on other social networks such as Twitter and Facebook.

Otherwise, eToro offers its users a user-friendly, simple and intuitive platform that is ideal for novice traders. With it, you can easily identify traders who meet your trading and investment needs.

Ava trade: Trade on Multiple Financial Instruments with AvaSocial

Thanks to its AvaSocial application, specially designed for collective trading, AvaTrade makes your collective trading experience even more convenient and efficient. This application is based on the efficiency of ZuluTrade, one of the leaders in the sector. Avasocial is a A state-of-the-art social trading platform with high-level trading capabilities, offering you access to a wide range of markets: social trading forex, stock indices, cryptocurrency (Bitcoin, Ethereum, Litecoin, Ripple) and stocks (with more than 250 different instruments).

Excluding the social trading on etoro or Ava Trade, you can also test the social trading on xm or Social trading on Robinhood. These two community trading platforms might also suit you.

Doing Social Trading: the Steps to Follow

Generally speaking, to do community trading, you must first choose a trading platform and register. To present the process to you in detail, we have chosen the broker eToro. Fortunately, most brokers proceed in the same way.

How to do Social Trading on eToro ?

Step 1: Register on eToro

Create account social trading etoro is a fairly simple exercise. To achieve this, just follow the given process.

Go to the homepage eToro and click “join now” or “login”

Then, you will be required to fill out an electronic information sheet where you will have to indicate your:

• username ;
• e-mail address ;
• password.

Check your data carefully so as not to bias your information. For example, if the email is not correct, you will not receive the confirmation message and your registration will not be completed.

eToro also offers you two alternatives to register more quickly without having to register information first. All you need to do is link your Google or Facebook account.

Before clicking “Create Account,” you can (and should) review the Terms of Service and Privacy Policy provided to you. eToro. If you agree to these conditions, check the dedicated boxes. Now, you can click on “create an account” to save your registration and have your new account eToro.

Step 2: have your identity verified

Speaking on eToro, you absolutely must verify your account to take full advantage of it. Being a Reputable social trading broker eToro must comply with the KYC (Know Your Customer) process which ensures the veracity of the information provided.

To verify your identity, click on the “complete profile” tab at the top left corner of the homepage.

The tab dedicated to verifying your identity is displayed. Press "Continue" and continue with your identification.

At this level, you must register your verifiable personal information:

• first name ;
• middle name (if you have one);
• gender;
• Date of Birth.

To continue, press the right arrow just below.

Next, you will need to enter your:

• address
• trading experience
• trading experience with leverage
• trading knowledge
• assessment of your trading knowledge
• planned investments
• activity expectations
• attitude towards risk (indicating the amount of your initial investment)
• social status or that of your relatives
• financial situation and your source(s) of income.
• familiarize yourself with the educational tools eToro and educational information proportional to the risk.

If you have completed your profile, you can now verify it by clicking on “Continue”. To complete the verification, you must provide:

• an identity document: CNI (national identity card), passport or driving license
• Proof of address: tax deed, letter from a municipality, electricity bill, water bill and gas bill. However, the mobile phone bill is not accepted.

Step 3: credit your account

Now you can provide your account eToro and even make safe withdrawals. Credit your trading account eToro quite simple. In addition, the platform offers various payment methods.

Go to “My Account” and click on “Deposit Funds”. Fill in the amount, currency, payment method and related information.

Note that no commission is required for deposits, but US$5 is retained for each withdrawal. If you are a beginner, we recommend that you start with an amount of $200, which represents the minimum acceptable deposit at eToro.

Step 4: Set up social trading

With a funded functional account, you can now set it up as a trader. Let's go !

Choose a market to invest in

eToro provides you with a wide range of financial instruments for community trading. To choose a market to invest in, click on “markets” on the left strip.

You also have the option of opting for CFDs (Contracts For Difference) to take advantage of price fluctuations without needing to own the underlying asset.

Open a trading position

Once you have chosen the market in which you wish to invest, click on “sell” or “buy”. For example, if you choose to buy a share, the corresponding pop-up menu is displayed. You will need to provide:

• the amount to invest (units)
• rate (if needed)
• take-profit
• Stop Loss
• leverage

If everything is OK, you can now settle your trade and click on “Place an order”.

If there are no open positions or orders, click "Open Position".

Choose a pro trader and activate the social trading function

In general, to choose a pro trader, you must take into account a certain number of criteria detailed below (in the section how to choose a good trader to copy).

Speaking on eToro, searching for a trader to copy is quite intuitive and the broker provides you with multiple methods to allow you to find the trader who best meets your trading and investment needs. Simply go to “Copy People” to browse the portfolios of many successful traders before copying them. The Editor's Picks section highlights Popular Investors who have recently been copied and deserve your attention.

Note: The configuration process on the iOS and Android mobile app is almost identical to that on a PC. Getting started with the application eToro is actually very easy. When you have completed the 3 preliminary steps, simply select your trader and click on “Copy”

For or Against Social Trading: the Verdict!

Copying the best traders in one click to generate profits without providing effort is a dream concept. Some believe it, while some are still skeptical. Trusting others to invest in the stock market, is it really a good idea? In this Social trading reviews, we address your concern.

What are the avantages of social trading?

Collective trading presents a good number of advantages.vantages. The most important are:

• Benefit from the experience of thousands of successful traders: even if you lack financial expertise, you can invest by copying the positions of experienced traders and even use them as a basis for setting up your own strategy. automatic trading. This amounts to replicating their performance in trading.
• Going through the "Trading Training" stage: learning to trade is a real investment in terms of time and money. These training courses don't guarantee you'll become a trading expert. With group trading, you can skip this step.
• Easy to get started: all you need is your phone to begin. Community trading is the safest way to start trading without any skills or experience.
• Building a community of commercial investors: Collective trading sites set up communities of investors, within which you can exchange with other traders and share knowledge, while collaborating with various structures.
• Access top traders with just one click: a wealth of experience is available with a single click. Even novice investors can connect with qualified traders for one-on-one mentoring.
• Quickly access information from reliable investors: Community trading sites significantly reduce information search time by offering detailed information directly on their platform, provided by professional traders from around the world. These platforms also offer the opportunity to interact with these experienced traders through a forum social trading.
• Learning by observing and practicing: you have the opportunity to analyze the logic and reasoning of the traders you follow. Learning here is more hands-on since you directly apply the strategies of these experienced traders.

What Are the Risks of Social Trading?

Community trading also has its downside. Of course, it is impossible to make money without taking risks. Here are the disadvantages of community copying:

• False sense of security: Naturally, we feel confident when working with the best. By copying successful traders who boast incredible performance, we can tend to forget that trading itself is a risky activity where you don't win every time. This can tempt you to invest large sums without assessing the risk.
• Choosing the wrong traders to copy: you must be able to select the trader who best meets your expectations, otherwise you increase your risk of failure. For example, if you are looking to make a long-term investment, you should avoid copying traders who operate in vulnerable and risky markets.

Summary and Verdict!

Perfectly adapted to the beginner, community trading is undoubtedly the most reliable and pragmatic trading model. It is particularly the fact of entrusting your investment to a trading expert that makes the charm of this activity. It should be noted that this type of trading is old, but has been updated thanks to new technologies. If you're a beginner, here's how to get around the pitfalls of collective trading. You have to :

• invest what you are prepared to lose, even if you copy the platform's top-performing trader.
• Choose the trader that best suits your needs. We explain how to choose a good trader to copy below.

Are you interested in community trading? Let's explore the concept in more detail!

How Social Trading Works

The operation of collective trading is similar to that of networks. To receive the positions of an average trader live, all you have to do is “subscribe” to his channel by clicking on “copy” (depending on the platform). So, if a copied trader executes an order, the follower trader will execute the same order. This is called “copy trading” or “mirror trading”.

In addition, investors can engage in community trading while keeping control over their transaction, thanks to trading signals or indicators. Trading signals are alerts issued by other traders or by bot of social trading on the investment opportunity that will serve you to speculate on the stock market.

Platforms usually reward experienced traders who share their strategies with money or statuses, depending on how many traders follow them.

The Basics of Social Trading for Beginners

Before embarking on community trading, here are the basic knowledge that you absolutely must have:

Product mastery: there is a wide range of financial instruments on the stock market (shares, bonds, Turbos, Options, Futures and Forex or CFDs).

Risk and capital management: it's essential to protect your money to make it grow. When you're a beginner, avoid taking excessive risks and only bet what you're prepared to lose.

Choosing the right platform and trader to copy: To get started, opt for an effective platform where you can find the best traders to copy. Also, choose popular traders who can meet your trading and investment needs.

The Features of Social Trading

The particularity of community trading is based on the existence of a medium of exchange and cooperation. Community trading is therefore characterized by:

• unrestricted information sharing: investors freely exchange a significant amount of information on trading opportunities.
• Collaborative trading: it allows collaboration, working in groups by pooling funds or sharing investigative work.

Is Social Trading Good for Me?

Community trading is not just for beginners. Here are examples of profiles that could find their account by copying successful traders:

• Traders who practice manual trading can turn to community trading to reduce risk by diversifying their strategies.
• Experienced traders, and even those who achieve high performance, can benefit from studying the strategies of other successful traders.

In Which Financial Markets Should You Practice Social Trading?

Investors engaged in trading have a wide market range. You can invest in one or more markets at a time, depending on your short, medium and long-term investment needs. Here are the most important financial markets where you can invest:

• The stock market. It's cheaper for long-term investments.
• The ETF (Exchange Traded Funds) market. It is suitable for long-term investments.
• The cryptocurrency market. It is suitable for both short-term trading and long-term investment.
• The commodities market. It is suitable for short, medium, or long-term trading.
• The forex market. The social trading on Forex is ideal for very short-term trading.

How Much Can You Win or Lose with Social Trading?

Concretely, it is not easy to define the probable gains on a community trading site. But statics show better profitability on community trading networks. However, the majority of beginner traders lose a lot of money because they jump in too quickly without putting in any effort. Some, invest wholeheartedly when following high performance traders.

Is Social Trading Regulated?

Community trading is regulated in Europe. The European Securities and Markets Authority (ESMA) asks regional regulators like the FCA to require authorization from “Financial Investment Advisors” in order to operate a collective trading platform. the Social trading in France is regulated by the AMF and in Great Britain by the FCA.

Outside of Europe, it's a little more carefree. Some authorities do not recognize community trading and no additional authorization is required. Generally speaking, global standards are set in Europe. If you want to get started and avoid a To avoid social trading scams, it is best to choose a platform that is influenced by a regulatory authority.

What to Know Before Getting Started in Social Trading

If you are a beginner, here are some tips that will be of great use to you for a best social trading:

• choose one Regulated social trading site with a good reputation.
• Try practicing in demo mode.
• Avoid investing big for a start, even if the trader you follow shows excellent performance.
• Diversify your portfolio by copying the trades of several experienced traders.
• Prioritize long-term investments rather than quick gains.

How to Choose a Good Trader to Copy? Criteria

The following elements help determine the right trader to copy.

1. 1. The type of trader – It's important to know whether the trader you decide to follow works independently, within a firm, or is part of a hedge fund. You should also find out if they use automated signal analysis systems or trade manually.
   2. Expertise Level – A professional trader's mastery of their trading strategy determines whether or not to trust them. You need to determine if they rely solely on technical indicators and chart analysis, or if they also conduct fundamental analysis of the economic calendar. You can trust a trader who combines these two strategies, as they offer greater security.

The trader's experience

To find a good trader to follow, you need to look at the trader's experience. He must practice for at least 12 months in the environment. The more experience he has, the better his analysis will be. Over a longer period, you can determine its performance according to the different phases of the market (market in range, without trend, bullish market, bearish market).

The success rate

A good trader is one who has a fairly high success rate. If it is above 80%, it means that he has excellent risk control. He manages to cover his losses with a diversified portfolio, and an activity on several markets at the same time.

The investment term

Considering your patience, you can opt for a popular investor with a long-term strategy, or a Day Trader who favors small operations during the day. The duration of the investment must be compatible with your profile.

Attendance and “ROI”

A popular trader to follow is one that shows consistent results over a long period of time. For example, it is better to choose a trader who maintains a return on investment of 3% monthly over the long term than one who alternates between good and bad results over the same period.

Risk taking

You must be interested in the risk taking of the trader you decide to follow. It is important to favor a professional who installs a safety net to limit the risk. As a follower, you cannot trust a trader who opts for unlimited risk. You need to check if he places stoplosses and how far he places them. Placed too far from the entry point, the stoploss leaves a huge risk while a stoploss placed close to the entry point helps control the risk.

popularity and communication

You need to be interested in how many people are following the popular trader. This criterion makes it possible to determine the popularity of it and the reliability of its analyzes. It is obvious that if several people copy the strategies of a trader, it means that he obtains good results.

How to Become a Copy Trader?

In general, here is the process to follow to become a trader to copy:

• create an account on a trading platform.
• Develop your trading strategies and publish them.
• Start trading to improve your performance.
• Communicate around you and your strategies in the networks to attract subscribers more quickly.

How to choose your Social Trading Platform?

Here's how you can easily find the Best social trading site to get started safely:

• Choose a platform regulated by a regulatory body like the AMF in France or the FCA in Great Britain.
• Opt for a fairly intuitive platform, offering comprehensive tools (leverage, indicators, etc.) and with an excellent responsiveness/stability ratio.
• Choose platforms offering access free social trading, unlike paid access which presents no avantage additional.
• Evaluate the seriousness of the broker based on the user reviews social trading forum and reviews from reference sites.

Conclusion

Based on the With the rise of social trading, trading becomes accessible to anyone who wants to get started. However, it's important to have a solid understanding of trading fundamentals to maintain control over your investments. Even if you copy the most successful trader, remember that even experts experience trading setbacks. Therefore, remain rational to protect your investments.

FAQ

❓ How does community trading work?

The operation of community trading is quite simple. This involves automatically replicating the positions of an experienced trader or drawing inspiration from their strategy to invest by subscribing to their channel.

Do'eToro is a serious site?

Without context, eToro is the best social trading platform. It is approved and regulated by the CFA. Note eToro offers community trading solutions suitable for both beginners and experts. Our social trading review gives you more details.

⚙️How to do Copy Trading?

1- Choose a social copytrading platform, preferably regulated as eToro 2- Create an account 3- Verify your account 4- Credit your account 5- Follow professional traders to replicate their investment strategy or draw inspiration from it.

❔ What is a trading account?

A trading account is a profile created on a trading platform to buy and sell assets on financial markets to realize a gain and earn money. The financial assets in question here are shares, commodities, currencies, and derivatives.