Looking to learn from the best traders? There are plenty of platforms that make it possible, but our guide below will help figure out which one is best for you.
For many consumers, investing can feel complicated and difficult–especially for beginners. However, there are ways to learn from successful traders and copy their trades. This can be done through social trading platforms that allow you to see what others are doing, and then make your own moves.
What is Social Trading?
A social trading platform is a social network designed for traders. Instead of posting selfies, participants share their latest trades and strategies. It’s possible for you to pay attention to what someone else is doing, follow traders that have similar philosophies to you, and learn from them.
Not only can you follow traders and connect to a community of investors, but in some cases you can also execute trades on these platforms, copying what others do–and hopefully make some money.
However, social trading isn’t widely accepted in the United States, and you might not have the same access as non-U.S. traders for trading possibilities. Even if you can’t execute trades, though, you can still participate in the community and try some of the trading strategies on your own.
Social Trading Platforms that Allow Access to U.S. Residents
As noted, some of the instruments traded on social trading platforms, especially contracts for differences (CFDs), aren’t available in the United States. Additionally, some social trading platforms don’t have the proper licenses to operate in the U.S.
However, that doesn’t mean that there are no opportunities to get involved if you live in the U.S. There are some platforms that are available for U.S. residents. Here are a few.
eToro is one of the most well-known social trading platforms in the world. You can interact with other traders, get tips and strategies, and even copy their moves. In the United States, eToro has been slowly expanding its offerings.
Originally, when eToro came to the U.S. in 2018, it was only possible to use the platform for currency trading. Today, though, eToro is working to expand its offerings in the United States. As of July 2019, eToro Real trading is available in the following states:
- Rhode Island
- South Carolina
- South Dakota
- Washington D.C.
- West Virginia
If you don’t live in one of those states, you can still learn about trading and practice strategies by using the Virtual Portfolio. Also, some features and markets still might not be available to you, so pay attention to what’s available when you trade.
For the most part, eToro is easy to use, allowing you to quickly identify signals and use information to make your own trades or copy others.
Read More: eToro Review
This social trading platform focuses on the forex market, and there are only two brokers that U.S. participants can use with their social trading account. You can join ZuluTrade for free, and watch the trades unfold. Plus, there’s a demo account option, providing with the ability to try different strategies before you risk actual money.
ZuluTrade’s website is intuitive and easy to use. You can see market sentiment, based on the trades made by members, and you can also see the top performers and the amounts in their portfolios. You can also join as an investor, where you can select different strategies to copy and build your portfolio based on what’s been successful for others.
The SwipeStox app is available for iOS and Android devices and is owned by Naga Trader. Naga Trader is one of the main social investing platforms, and using the SwipeStox app allows you access to trading signals and the ability to follow traders and copy their moves.
Like many of the other social trading platforms, you need to work through a supported broker. With this unique app, you can look at trades and traders and swipe left or right to indicate what you like–sort of like Tinder.
It’s possible to follow trading signals for a number of assets, but trading options are limited for U.S. residents. Because SwipeStox is compatible with FXCM, you might be able to get in there, but if you do, you’ll face restrictions, similar to the types of restrictions you’d see with ZuluTrade.
Naga Trader does have a number of unique funding options, including cryptocurrencies.
This company focuses on automated trading systems. While Trading Motion features more than 900 systems, only 600 are available to U.S. residents. However, if your broker is supported, you can pay a monthly fee to subscribe to a system of your choice. There are no demo accounts, and you need to look through the site to see if you can identify a system that you think will bring you success.
Once you’ve identified that system, you can use it to make trades. It’s important to stay on top of the situation, though, to ensure that you’re still getting the right approach for your money.
Like Trading Motion, iSystems uses a system-based trading. There are almost 1,400 systems available to U.S. customers. The systems created must meet various regulatory requirements in the United States, so there are fewer systems available to U.S.-based traders than to those located outside the country.
However, if the system meets the requirements, you can choose from a variety of systems that were created by dozens of trading professionals. Just choose your system and activate the strategy through one of the more than two dozen U.S. brokers available. It’s even possible for you to act as a developer and create your own automated trading system.
You can join FX Junction for free, allowing you to see the forex trading signals of others, and automatically copy them from your own trading account. In order to use FX Junction, you need to already have a registered brokerage account that uses MetaTrader4 or MetaTrader5 platforms. Once that’s done, you can choose which signals from professionals you want to copy.
FX Junction uses what they call validated Signal Providers that you can follow. You might have to pay an AutoCopy fee, based on the provider you follow, but that’s the main cost you’ll see. If you become a Signal Provider yourself, you’ll then be able to receive additional profits from those that copy you.
Unlike many other social trading platforms, FX Junction isn’t actually a broker or deal maker, nor is it an asset manager or advisor. The company plays that aspect up, focusing on the fact that it doesn’t have any conflicts of interest.
Like Trading Motion, you can pay a subscription to use an automated system that copies successful traders. You need to check to see if your broker is on the list of partners, though. For those interested in keeping trading costs lower, Interactive Brokers is on the list and can be a good choice.
With Collective2, you choose subscription levels based on how many strategies you want access to each month. If you want access to unlimited trading strategies, you might have to pay up to $299 per month. When you consider your situation, make sure you understand how paying a trading fee can cut into your overall profits.
While not exactly a social network in the way eToro and ZuluTrade are, Tradency still uses aspects of sharing to allow you to copy trades made by others. Using algorithms, Tradency’s Mirror Trader generates strategies based on how professionals are making moves all over the world.
You can take a look at the different strategies and then use the platform to copy the strategies in your own account. You can see other traders’ portfolios of strategies, and get an idea of how to do the same thing with your own account. You’ll need to find your broker on the list, and realize that some instruments and investments won’t be available to you as a U.S. trader.
Rather than setting up automatic trades, this social trading platform lets look into what’s under the hood for professional traders. You can “peep” at what they’re doing–for a subscription fee. You get emails and other alerts when trades are made so that you can go ahead and copy the trade on your own.
Joining Peeptrade is free, so you can kick the tires a bit. Some of the professional investors will even allow you to “peep” their trades on a trial basis before you start paying for regular access.
This strategy, using the MQL5 website, is a little different when it comes to social trading. You’ll need to be set up with the MetaTrader platform, using either MT4 or MT5. Because this is a common platform, there’s a chance your broker might use this.
The MQL5 website has a robust forum that you can use to get more information about forex trading, and interact with members of the community. On top of that, it’s also possible to subscribe to signals, so you receive them automatically. You can also buy systems developed by traders. The cost of the system depends on the trader.
However you do it, though, you use what you’ve learned in your own terminal. So, if you buy a system, you can then run it from your own MetaTrader dashboard. You can also find a virtual server to be constantly copying a trader’s moves and signals, without having to run it on your own.
Should You Use Social Trading Platforms?
Realize that a lot of these social trading platforms come with risk. Aside from being unavailable to U.S. residents in terms of legality, many of them use instruments that are considered risky, like currencies, and include CFDs, which are derivatives. In fact, there are some social trading platforms that won’t even let you sign up if you’re a U.S. citizen living outside the country.
However, there are social trading platforms that do cater to U.S. residents and will let you engage in trading–although it might be on a limited basis. You might not have access to the full range of markets and assets as a U.S. resident. Carefully consider what types of trading you might do. Many of the social trading platforms focus on forex trading, although it’s possible to find those that offer other types of trading.
Before you use a social trading platform, check to see if there’s a free trial or a demo account. Review some of the automatic strategies and look at some of the developers. Many social trading platforms allow you to see historical success, so you can figure out how likely you are to profit when you copy someone else’s signals. Also, pay attention to fees, since you might be on the hook for copy fees, autotrading fees and subscriptions, on top of regular trading commissions.
Finally, you can also join investing social networks to learn about trading and pick up tips, and then do your own investing based on what you learn. You don’t necessarily have to join a social trading website. Just by looking at what others are doing and discussing strategies, you can use your own brokerage account to mirror what you see online.Topics: Investing • Tools & Resources