Social trading began sometime in 2016 when one of the providers listed on this site (Zulutrade) opened the first prototype to the public. Social trading has now grown to become a big industry within the forex market, with many brokers and providers offering various versions of it. This has opened a new vista of opportunity for expert traders and beginners, and has also created a market for developers of copy trading software.
So what is social trading and why is it such a big deal?
Social trading is a style of trading which actually works like a passive investment vehicle. On one hand, we have the expert traders, who register as Providers of trading signals. On the other hand, we have the Copiers/Followers, who are traders without much forex experience and trading capacity. The Providers and Copiers/Followers are linked together on the social trading platform, where specialized copy trading software will automatically copy all trades taken by the Provider and implement them on the trading accounts of those Followers who have chosen to copy their trades. The social trading platform can be provided either by a broker or by a third-party network.
There is also an element of risk that comes from the kind of social trading provider or network that is used for the social trading project. It is important for Followers and Providers to ensure that the social trading network is able to deliver perfectly for both sides. What are the parameters that need to be looked at when identifying a good social trading network or platform?
1. Must Be Stable, Reliable & Easy to Use
A social trading platform which is unstable, has a lot of bugs, is difficult to use and constantly freezes/malfunctions is no good to either Provider or Follower. A suitable social trading platform should be able to execute the copy functions very fast, and should be easy to use.
2. Provide Ability to Select Multiple Providers
A good platform should give Followers the ability to select multiple Providers, so as to compile a portfolio that spreads their risk. Choose a platform that allows for selection of multiple traders to copy.
3. Must Display Analyzable and Actionable Performance Analytics
Critical to the success of a Follower’s venture into the world of social trading is the ability to select the best performing Providers, whose strategies are profitable and not excessively risky to use. The only way to select such Providers is if the social trading platform has put in place a well-oiled analytics setup which allows thorough scrutiny of Providers. Performance metrics commonly used for the selection of Providers include:
Now that we have provided a background as to how social trading platforms work, we present the top 5 independent social trading platforms/networks.
Zulutrade is the company that started off the social trading revolution when it launched an “autotrading” platform in 2006. This has since been modified to offer traders the social trading platform it runs today. You can join the platform as an Investor (Follower) or as a Trader (Provider). The platform also runs on mobile devices using the ZuluTrade app. One of the glam features of ZuluTrade is the Traders Combos, which is an algorithm-driven feature that allows a Follower to combine the strategies of various Providers into groups, which can then be copied to the Follower’s account with a click of a button. ZuluTrade also presents the Social Charts, which shows the exact points on a chart where the top Providers place their orders. There is also a snippet by the side which shows recently closed positions from various Providers.
FXStat presents a social trading platform which is available on the web and also as a mobile app for iPhones and Android devices. FXStat allows you to copy successful forex and stock CFD traders by subscribing to a portfolio. You can also design your own portfolio of winning strategies using the Autotrading feature. One advantage that FXStat has is that it can integrate with the trader’s MT4 client, and deliver the trades to an MT4 account from within the FXStat interface. FXStat presents a unique system by which successful traders can be discovered on the platform and copied. The performance metrics identifies which traders are using manual trading, and which are using automated systems. FXStat also brings the social component of trading to the fore by allowing traders to connect and follow each other in the discussion boards.
Myfxbook is traditionally known for its third-party verification of trades on the MT4. But Myfxbook goes way beyond this. Myfxbook presents an autotrading platform which has to be connected to the MT4 of a compatible broker before the autotrading strategies can be successfully copied to the trader’s MT4. Thirty-eight brokers are currently supported. Myfxbook runs arguably the most curated social trading network, as there are very stringent selection procedures that ensure that only the best live account traders can ever provide signals to be copied. Incentives to Providers are paid strictly for profitable trades only. This keeps Providers accountable to the Followers that copy them by ensuring that they provide only the best trade signals. Myfxbook is a social trading provider worth considering.
FXJunction allows you to create a social trading portfolio, in which profitable strategies can be combined and copied into an existing MT4 trading account. FXJunction does not work with any brokers, so you are free to open an MT4 with any broker of your choice. Providers are free to compile their own fee structure. FXJunction provides a Leaderboard featuring traders who have registered as Providers. Trade stats for each are clearly displayed, and those with negative returns or with outlandish positive returns (which have come about by application of excessive risk) are usually blocked from the AutoCopy process. This ensures that traders can make a choice from traders whose trading styles do not use excessively risky methods, and which lead to sustainable profits.
MyGidiTrade is a social trading platform for the forex market. Traders can therefore not have a portfolio mix based on the assets traded. MyDigiTrade offers a free demo account to its clients, so they can at least test out some of the copied trades before use on a live account. You are allowed to use an MT4 from any broker to be able to copy trade on MyDigiTrade. One of this platform’s benefits is the safe fund allocation system, which ensures that the trader’s lot sizes are proportionately matched with that of the Provider being copied. If a Provider uses 2% of his account, this is maintained on the Follower’s account.
Feel free to check out these top 5 independent providers of social trading and put the power of communal reasoning and trading to work on your behalf.