Some of the most important factors that make for a good social trading platform have been considered, including platform features, markets, tools, fees, funding options, usability, tutorials, customer service, and more.
Having the best social trading platforms based on our reviews listed in one place can help save time for traders looking for the best social trading platform.
These online social trading platforms are well established in the online brokerage industry, providing the best social trading platforms for traders across the world.
Following our list of the best social trading platforms, we will now look at what social trading platforms are used for and the most important factors to consider when looking for a reliable social trading platform.
A supportive online social trading platform allows traders from all over the world to discuss and share trading strategies and signals with each other. Similar to any other social network, a social trading platform can have a personal profile, follower/follower list, news feed, and more.
The main advantage of a social trading platform is that you can choose to copy other traders' trading signals directly into your own trading account.
This allows traders with little experience to benefit from the trading skills and expertise of professional traders.
Most social trading platforms will allow you to sort and filter signals so that you can select only those that suit your individual investor preferences and goals.
You should be able to add or remove signals at any time while setting your desired risk level.
It is important to ensure that the social trading platform is regulated by one of the most respected regulatory authorities. Some of the most important government regulatory authorities to watch out for are the Australian Securities and Investments Commission (ASIC), the Cyprus Securities and Exchange Commission (CySEC) and the Financial Conduct Authority (FCA) in the United Kingdom.
By using a regulated broker, investors have some form of protection in case something goes wrong. Regulators set out strict rules and regulations that the broker must abide by and that they can assure investors that they are using a social trading platform that it operates with the utmost integrity.
You can verify that a broker is regulated by checking the regulatory license number with the relevant authorities to ensure the regulation is legitimate and up to date.
As each online broker may offer a variety of different asset classes to trade through their online social trading platforms, you should check to see if they offer the specific markets you are interested in trading.
You may plan to diversify your investment portfolio in the future, so consider the product range as it can make it easier to expand your portfolio when the time is right to do so.
One of the main concepts of social trading is copying the trading signals (following) of other traders. The larger the user base of a social trading platform, the larger your choice of signals.
However, it is important to consider not only the number of traders, but also the quality of their trading strategies. You can usually do this by checking the performance of the various signals offered on the social trading platform.
Most social trading platforms contain some important tools for researching and analyzing the different trading signals they offer.
Check if these tools are freely available and sufficient to filter the results according to your own requirements. Some users may need more specific statistics compared to others who just want to see general profit and loss.
You may also need a specific tool that is important for enhancing your personal social trading experience. So, check if the platform incorporates these tools.
Most social trading platforms will charge a fee from the signal provider, follower, or both. Some fees may be fixed and others based on performance.
It is important to understand what fees are charged and calculate them within your money management e trading strategy. If you also plan to conduct self-directed online trading, you should be aware of spreads, commissions, swaps and any other fees.
There may be a fee payable just for using the social trading platform, although this is rare and most are provided for free. Typically, you will only pay depending on your trading activity, unless you use a specialized social trading platform that has advanced functionality.
The commission you pay for your trading activity may vary from broker to broker. Some trading strategies, such as scalping, rely on small price movements, so performance can be affected by the commission. It is important to consider the overall costs you will incur and the effect it will have on your trading strategy.
The spread is the difference between the bid and ask (buy/ask) price, which can vary depending on the volume of liquidity and the quality of liquidity providers an online broker has.
Some brokers offer both fixed and variable spread accounts, some offer commission-free accounts, but instead mark the spread to compensate for this.
In general, the more liquidity the broker has, the tighter the spreads can be. It is important to take the spread into account when planning your trading strategy, especially if you are planning to follow or provide a scalping strategy.
If you hold a position with your online broker overnight, you will likely need to pay a swap fee. This is an interest rate by the procedure of moving open positions from one day to the next, also known as rollover.
This is another cost to consider in your money management and trading strategy.
Some social trading brokers offer free Islamic trading account exchange that comply with the Sharia law, which allows Muslims to engage in online trading through its platforms.
In addition to the platform, spread, commission and overnight swap fees, there may be additional fees for account downtime, funding and more. You should make sure you are aware of and understand any potential fees you may incur.
Some social trading platforms are built around technology you may already be familiar with, such as the MetaTrader platform.
However, some social trading platforms are unique to a particular broker and will require some practice to familiarize yourself with how they work.
Make sure it's a platform that you find easy to use and that, ideally, it has lots of online tutorials to help you understand how it works.
Most social trading platforms will offer leverage to traders. In short, leverage allows you to open a larger position than you could with your current balance.
For example, if you had a leverage of 1:30 and a trading account balance of $10.000, you could effectively open a position of $300.000 (10.000 x 30 = 300.000). Make sure the social trading broker offers the leverage you need.
While leverage can increase your potential profits, it can also greatly increase your risk exposure and lead to large losses. It is very important that you have a clear understanding of what exactly leverage is and the significant risks it entails before you start trading online.
If you are the type of trader who prefers to be guided and shown how to use certain software and tools, it might be a good idea to choose a social trading platform that has plenty of tutorial videos and guides to teach you how to use the platform.
You will need to make sure that the social trading platform will run on your computer, VPS or mobile device by checking the specification requirements.
Some platforms will run directly in your web browser, so make sure it's supported. Each online social trading platform will also have a mandatory minimum deposit that is worth considering.
Each social trading platform offers different options for making deposits and withdrawals to and from your online trading account. Most brokers accept bank transfers and credit/debit cards. If you prefer to use an online payment processor, make sure it is available.
If you have a general or technical question, it's best to get a quick and helpful response from the customer support team. You can check what support options are provided as online chat can often be the fastest and most convenient for most traders.
Customer service hours are also worth considering, as is the time zone of the brokers.
Now that you've had a brief overview of what social trading platforms are and some of the most important things to note, you might be thinking about opening a social trading account.
This can be a quick and easy process that usually requires filling out a short online form. Just choose the social trading platform that suits your needs and follow the account opening process. Once your account is verified, you will be able to gain access to the social trading platform and connect with other traders.