Social trading is the combination of online trading and social networks on the financial market, which can be accomplished through reputable trading platforms such as MetaTrader 5. The key here is copying or mirroring the deals of experienced traders. Surprisingly, it has gained the attention of traders, especially novice traders since it won’t require you to make complicated decisions. But, keep in mind that there are risks to consider.
What makes it tough is to find a perfect and suitable signal provider that you can follow. When selecting a signal provider, you must consider if the trading platform is capable of dealing with the risks associated with trading, can positively raise profits, or help you prevent the loss of your trading funds.
Three Trading Concepts
There are three trading concepts – copy trading, mirror trading, and social trading. They are often confused, therefore, you need to know the difference between these trading concepts.
In this trading concept, an algorithmic trading strategy is being used. On the trading servers, transactions often take place and not on the investor’s side.
Copy-trading and mirror trading are almost similar except that the users are real traders sharing the same signals through a trading platform that helps log all the transactions. This time, the transactions in copy trading take place on the device of the trader.
This is mostly used as an umbrella term for mirror and copy trading. In this concept, traders tend to share their operations, insights, comments, and other trading actions. These conversations mostly happen in instant messengers and social networks.
Best Trading Platforms for Social Trading
This copy trading platform is connected to MetaTrader 4 and MetaTrader 5. Since it is connected to two of the most reliable and reputable trading platforms nowadays, you are sure to get the best results. Although it is free since operations in MT5 are purely free of charge, you will have to pay when you follow a signal provider/trader worth USD30 to USD500. MQL5 particularly provides trading analysis on web portals, shared hosting services, social trading, and other extra features.
This social trading platform was founded in Cyprus in 2007 with offices in Israel and England. This platform is basically for Forex brokers and CFD brokers. It uses a Machine Learning technology that helps optimize your trading performance. eToro requires a minimum deposit of USD200. A demo account can be used by US citizens but the live account cannot. The cons of eToro is its no risk limitation given to social trading and it is also in the early stage.
In 2007, ZuluTrade was founded in the United States. This social trading platform is dedicated to copy trading, which grants access to strategies for Forex traders and their performance ratings. It also allows monitoring and copying of other traders. The main cons of ZuluTrade are its inability to access US residents and the risk of losing your full capital.
Knowing the top social trading platforms and their pros and cons should help you decide the better option for you. Always remember to choose based on your trading style and needs.