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A bunch of regular people are getting rich overnight from social trading trends.

So, while we’re not quite sure what the future will look like for social trading, something’s going on. It’s sensible to be a little curious.

Social Trading

Today the technology works more or less like a social network. But instead of sharing selfies or tagged photos, it lets people swap trading ideas. Millennials are particularly hot on this – they’re creating hot “meme” stocks through apps like Robinhood.

We haven’t seen this level of young trading activity since the ‘90s.

The surprising thing? Some of these assets are holding their value over time. Trading is transforming. It’s wise to be open-minded. The following are the best social trading platforms to investigate this moving landscape. 

Table of Contents:


Why Millennials Love the Popular Social Trading Platforms

So what’s happening?

Well, social trading is exactly designed to figure that out – particularly when there are targeted efforts by your government to mask what’s actually happening, in order to get you to react how they want, emotionally.

House of cards

Trading is a game of competition. And emotions can get in the way. Social trading aims to even the playing field through crowd wisdom. Especially younger traders. By boosting transparency.

Many of those born before the ‘70s bought awesome properties for super cheap. Now, Millennials are investing early into “disruptor” stocks and shares and crypto. In order to reap the same effect.

There are different risks associated with this however. Instead of getting a house, you’re getting digital infrastructure – hoping for a crazy gain. Unlike a house, you can’t live inside of a crypto coin or company stock. And many social traders pump up assets then escape before the thing deflates.

So keep in mind, there is always the element of contest.


Best Social Trading Platforms UK – Our Reviews, 2022

Social trading information sources are spread around. Find tips and groups everywhere from YouTube to Reddit, and popular stock trading courses forums.

But for actual trades that directly harness crowd wisdom, there is no more popular social trading tool than eToro.

Service ProviderRating
1. eToro★★★★★Open Account
2. Pepperstone★★★★★Open Account
3. AvaTrade★★★★Open Account
4. IG Markets★★★★Open Account


1. eToro – Overall Best Social Trading Platform

Key Features:

  • Can improve your odds, 6-10%
  • No commissions 
  • Low minimums
  • Lots of crypto coins
  • Tons of assets

PROS

  • More than 20 million users
  • Suggests industries, e.g. driverless cars
  • Lots of varies assets
  • Best social trading

CONS

  • No VPN

📓 Reputation

⭐ The thing to know is that using eToro gives you the most powerful social trading available, particularly for copy-trading… 

This app does a bunch of cool things including suggesting top sectors, e.g. driverless cars; then wrapping them into baskets. You can trade a lot of traditional and uncommon assets. With the key features being its social trading abilities. 

Follow the exact moves of a community of investors and sharers. This massive online social network is no different to Facebook but for trading. Social feeds show notes, and cover different ideas and trading choices. 

eToro landed on the scene in 2009, leaving other sovereign pop-ups to keep up. To this date, they remain the best social trading platform around for beginners. Although there are better alternatives if you are a discerning trader, have already mastered the basics and are technically minded. 

For instance, AvaTrade lets you do interesting things with custom order making. But the other big names that offer social trading such as Interactive Investor require you to integrate a third-party plug-in, of which there are numerous different options, such as ZuluTrader and DupliTrade. 

The platform is completely zero-commission, which means you do not need to worry about management fees, nor are there any mockups, ticketing charges, or stamp duties when using the social trading platform for making trades. Although there are conversion fees for swapping one currency for another. 

Smart Portfolios

This feature permits multiple different types of securities, such as crypto coins stocks, into single baskets. And you can tweak these according to the particular sector you want to target, such as self driving cars. And according to global risk, conservative or aggressive. This will ramp up the level of innovation of your selected sector, targeting disruptors.  

So a bunch of data science and machine learning (best machine learning courses in 2022) behind how this works. Portfolios are discovered through this as well as the eToro’s team – in accordance to your specific account settings. The platform then shines through tons of data in order to tailor make your portfolio. There is a lot less data to affirm the success of outcomes on this platform, compared to a very well established mutual fund manager like BlackRock or Bridgewater Associates. So it’s definitely a gambit. 

Starting costs for portfolios are $500 (because a bunch of machine learning and data analytics is used, there aren’t any management fees). And there are a bunch of interesting opportunities, with oil being the most popular commodity traded on the platform. You can also apply leverage through the CFD vehicle.

And while the platform used to only have just over a dozen crypto coins, this is now over 50, with bitcoin being the most traded crypto currency on platform – even beating commodities and forex. 

Now that we’ve covered the best social trading platform, let’s overview some of the less beginner-friendly options out there. Each of these use a combination of third-party integrations, primarily DupliTrade and ZuluTrade. You will need some know-how. But eToro comes already loaded with this ability.


2. Pepperstone – Best Social Trading for Diversity

Key Features:

  • Commission varies 
  • Low account minimum
  • Tons of assets including crypto
  • Mirror traders
Pepperstone logoVisit Pepperstone

74.7% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

PROS

  • Major brokers
  • ASIC and FCA licences
  • Superb trading value

CONS

  • Copy trading not as good as eToro (and requires massive deposit)

📓 Reputation

Another firm that uses DupliTrade. So you know that you’re not getting as much customizability and user-friendliness, instead it is down to the user to integrate this third-party integration in order to get their desired effect. You should already have some good experience with trading platforms.

However, if you are indeed more of a discerning trader, this is a fully regulated platform that provides a decent number of signals. You will also need to be ready to take on a good amount of risk, as the actual advantage that this feature gives you only really comes into play if you really have tight fundamentals and readiness.

Registration is also straightforward, as with AvaTrade, letting you get yourself ready for trading in roughly three steps: getting your account registered, connecting it up with DupliTrade, making sure that auto executions are enabled, then tracking outcomes using the hub.


3. AvaTrade – Best Social Trading for Pros

Key Features:

  • No fees 
  • Start with small cash
  • ZuluTrade & Duplitrade 
  • Lots of securities

PROS

  • For discerning traders
  • Mirror traders
  • Lots of coins

CONS

  • Not great for beginners

📓 Reputation

AvaTrade is a comprehensive trading app that excels offering a lot of advanced integrations. For instance, if your focus is on options trading, there is a specialist platform for this. And among all of these differing integrations is an offering aimed at giving you social trading and copy trading capabilities, called AvaSocial.

You’ll obtain cheaper prices against the market, with accuracy and low latency, with fully developed executions. Because of all of these intensive capabilities, we’ve ranked AvaTrade as the biggest competitor to eToro.

Indeed, AvaTrade has given its users the ability to do automated trading for a long while now, however this has limited it somewhat. It’s developed its channels to professional traders, rather than retail investors. So while there are tons of signals, you need to have a bit of technical know-how to get this workaround. Overall, these signals can lead to underwhelming outcomes. It’s harder for beginners.

But the base function is pretty much the same as eToro, if one of the integrations is used – you just won’t get as much sleekness or user-friendliness, and it may be harder to find the right traders to match their moves. But you can pull from expert traders, mirroring their moves as they make them, becoming a “follower”. DupliTrade for instance feeds roughly 15 brokerage companies who all support the platform and provide signals to clients. With AvaTrade being their biggest.


4. IG Markets – Best Social Trading for Forums

Key Features:

  • Commission varies 
  • Some inactivity fees
  • Mirror Traders
  • Tons of assets including crypto

PROS

  • Great diversification
  • Big online social network
  • Cool community portal

CONS

  • Very basic copy trading

📓 Reputation


They’re still busy rebranding and catching up to the Robinhood’s (which doesn’t have social trading, despite taking tentative steps to integrate social features like profiles) and eToro’s, didn’t you know…? We’re still waiting for programmers to get them up to speed. So, once again, you’re not going to find any unique social trading capabilities, outside of a few educational resources like webinars on how to use the platform.

IG Markets Social Trading

Robinhood’s attempts a few years ago

All of these different providers use the same mirroring service, DupliTrade and/or ZuluTrade. For the meanwhile, eToro has captured the market due to trickling down on its sovereign focus early on. So for the meanwhile, the main advantage that you will get if you go with this alternative to eToro, that uses DupliTrade: IG Markets - is that this does happen to have one of the top-rated educational resources around as well as research news.

So it’s in fact a pretty handy community hub where you can swap notes on members who have taken an interest in exploring the markets. For instance, on the IG forum, there is plenty of opportunity to swap notes on market moves and openings, as well as growing with each other. And many of the integrations are user-friendly, such as connecting via the mobile app, or choosing the browser.

IG has great user reviews. No doubt, this community focus is one of the reasons. Their newsfeed pops up on the central website where you can at a glance overview trends, comments and more. Not bad, but to repeat, these alternatives to eToro are not up to scratch if you’re looking for the most intuitive and streamlined experience possible. We’ll see how things develop in the future.


Best Social Trading Platforms: Buying Guide

According to Forbes, Millennials will pump the price of disruptor stocks up for years to come. Inevitably, this means a future melting point. A good deal of traders today are, in fact, doing similar types of trading to medium or day trading.


Biggest Disrupter Assets in 2022

Young Investors Haven’t Been This Interested In The Stock Market Since The ‘90s. How to keep up? First understand that they’re much more willing to take risks than older traders and Boomers. And this inevitably means a greater chance of making losses.

WSB

So the game isn’t about playing it safe. This particular game is about absorbing small losses in order to potentially make huge gains.

It’s a ride to the moon, and hopping off in your parachute before the thing crashes. So you’ll need to be willing to spend lots of time in your app and reading about the latest and greatest opportunities that are the talk of the town. If that’s for you, then social trading may be too. 

Sure, a few millennials will bid on boring stocks to try to make a quick return, but they’re naturally drawn to disruption. For instance, there was a study by Apex Clearing of 1.8 million different trading accounts for Northern American traders who averaged in their early 30s in age. What were their biggest holdings?

Apple, Amazon, Tesla, and Chinese car company Nio (electric cars). They also injected tons of cash into other technological disruptors such as NVIDIA, and Square

Which basically means that younger investors want to support companies that are making a dent in the world. They’re optimistic people with a bright outlook that things can get better. But traditional investors see this as really just bad investments. Despite this criticism, these top four companies all spiked in the last year. One spiked to 570%.

Indeed, they were able to successfully choose a good number of the biggest trades for 2020. They go against the old hats of investment. For instance, after one buffet, through his Berkshire Hathaway company, sold off all of its holdings in the four biggest US airlines - millennial investors all flocked in, in order to buy up United, Southwest, Delta, and American Airlines. Usually these then climbed hundred percent, while other millennial traders may box by investing in “stay-at-home” firms such as Zoom.

An interesting study that came from the National Bureau of Economic Research concluded that the young investors on Robinhood actually kept a level-head during the market crisis and became “a market-stabilising force.” Referring to the pandemonium of March 2020.

Today, one of the biggest social trading hubs around is on Reddit’s WallStreetBets message board. This page was a big player in the GameStop epic. But it’s still used by young investors. Many of you have seen massive growths in their trading account balances, by taking substantial risks, some have even been enough to get rid of student loans or get mortgages for new homes. 

MIT Research on Copy Trading  

A couple of studies were released by MIT, under the direction of a computer scientist. 

In 2012, it was discovered that traders who used the eToro social trading network were able to improve the outcomes of users who use the “guided copying” capability, by between 6 and 10%. 

This is in comparison to traders who depended on manual trading. Those who carefully selected and invested in our had a 4% better result than those who chose a modelling trader at random. 

The study was duplicated in 2013 with the results showing that social training is not a reliable way to get better outcomes, although it can end up this way. And a further study in 2014 which was one in the centre of IBM research suggests that professional investors still regularly outstrip the performance of those who rely on copy trading in order to manage their investment decisions.


Busted! Copy Trading Challenges

Furthermore, a study in 2018 was released which concluded that when outcomes take a negative turn as a result of doing copy trading, these negative outcomes are exaggerated compared to traditional trading.

Reasons for this seems to be because traders are more likely to ignore a pattern of losing bids – they are more likely to try to keep losing positions and some costs, despite an overall reduced amount of volatility in their portfolios.

The core reason for this may be because of a behavioural quirk known as the “disposition effect”. It was coined in a 1985 study which found that humans are overall more resistant to losing then they are motivated to try to win. This explains why some copy traders refuse to let go of losing assets. The original study made its findings after observing traders who kept stocks that had lowered in value even though they would sell those that had risen in value. 

Which means that, according to this study, traders are more likely to try to go for an outcome if it profits than one that hedges against risk. If you are using copy trading, for some reason this effect seems to be amplified. 

How Copy Trading Alters Human Behaviour

Another study that came out recently discovered that simply observing a successful trader who is known for taking more risks increases the chances that you will too. So if you have the direct option to mirror these traders directly, this boosts how likely it is that you are going to throw caution to the wind.

This is all well and good if your goal is to take bigger bets with small capital in order to get asymmetric returns. But some users are not aware of how imitation can affect human behaviour and so do this unconsciously. A user for instance will see the behaviour patterns and success of one trader and naturally try to imitate it. 

It also encourages imitation in a more general way, because users can directly replicate every move at the click of a button. Some users think of high profits as a higher risk venture, and so this imitation can ignore luck, and feed into itself, so that the user becomes addicted to the thrill - even in their personal lives.


How Mirror Trading and Copy Trading Differs

Both of these two trading mechanisms try to simplify the trading process. In both cases, trades are being copied. But whereas copy trading is confined to matching the exact decision-making of a selected trader, or sometimes a batch of traders managing a portfolio of stocks in a similar way to index funds, mirror trading tries to use machine learning - matching up a combination of signals and account configurations.

In short, copy trading is about matching the real-time choices of a human trader with a proven track record and even an account profile. 

This isn’t exactly the same thing as having your laptop synchronised to Warren Buffet’s laptop, and mimicking every one of his financial decisions made over a morning coffee and McDonald’s. However it still lets you emulate a specific trader. 

Indeed, both of these are instances of social trading.

Let’s go into more depth: Mirror trading is designed to combine the many actions of various fund managers and investors. These entities are not necessarily working in tandem with each other. But the feature gives individual users the flexibility of being able to harness the many differing signals and bits of data analytics in order to feed into their specific trading approach. 

Which is why mirror trading is usually reserved for discerning traders who already have strong discipline in the study. Account settings are employed and this automatically generates suggestions for positions. 

Copy Trading Process ⚙️

  1. In order to start copy trading, first pinpoint a specific trader who meets your investment goals. Trailers can be filtered according to their level of returns yearly, aversion to risk, and popularity, and so on.
  2. Next is the amount of investment. Also, how spread around these figures will be. For instance, are you copying several different traders or only copying one who you are hard-set on? 
  3. Once a decision has been made, the platform automatically begins trading positions according to wherever your selected trader is doing. Because of this account connection, this is automatically. This also means that your account balances allocated live in the market.
  4. How perceptions can be adjusted according to budget, which you can determine. And how much you let one trader influence your balance can be tweaked. Some people diversify by choosing traders who have a wide range of assets and the length of holdings.

FAQs

Who Are the Different Types of Traders?

  • ☑️ Day Traders – Trader rarely holds a position across of the next day. Which means overnight fees are usually not a factor. But there are two types of day traders. The first kind are called “scalpers” owing to the fact that - like surgeons -they obsess about fast trades that make tiny victories which compound. But most day traders simply make one decision or a few during the day. The great advantage to daytrading is lowered risk exposure, despite the fact that there is higher acute stress. 
  • ☑️ Swing Traders - anyone who holds the positions overnight up to a couple of weeks is  falls in this category. This kind of trailer still depends on technical indicators, as opposed to fundamental principles. They work to the heartbeat of economic calendars and try to time according to events. These are slower than day traders, with stress that is spread around less acutely. The biggest advantage is this. But overnight fees come into play.
  • ☑️ Position Traders – This is where the likes of Warren Buffett and Ray Dalio fall into. This trading approach focuses on key investments which should be held onto for longer periods of time. Shorter swings in the market are generally ignored. Positions trading is the most strategico trading in terms of working to the fundamentals or principles of economics at the highest big picture level. This approach is most favourable to people who have larger amounts of time for doing research and analysing historical charts in order to discern where the market will go before anybody else.