What is Social Trading?
Social trading first started to become popular in the early 2000’s when traders began to mirror successful forex trading strategies. Social trading is almost identical to mirror trading and copy trading with a few minor differences. Although it is closer to mirror trading in essence. So, what is social trading at its core?
Social trading is an interesting way for traders who are not particularly knowledgeable about financial markets to find success through copying trading strategies. Social trading online enables users to copy and move forward with the same trading strategies of other more experienced traders. This probably sounds a bit odd, as most traders online put the time and effort in to do their own market research and come up with their own trading strategies.
What are the benefits?
Social trading allows those who are less trading savvy to replicate the trading strategies of more successful traders. It is also predominantly done with forex trading so if you can find the best forex broker Australia that also offers tailored social trading features then this is a great bonus.
Social trading online has become something akin to a social network. This is because the base function of social trading allows the users to interact with other traders, watch each other’s trades and learn more about the processes behind different trading strategies. Social trading online can be a great way for those traders who are not well versed in financial markets to still take part in the industry. But how does social trading online actually work?
How to Use Social Trading
There are a couple of things you need to know before you jump straight into your first stint of social trading online. As we mentioned, social trading is a lot like a social network in that you choose to “follow” or “subscribe” to different experiences on a social trading platform. The platform may not be specifically designed as a social trading platform but many of these brokers offer the option to do so with varying degrees of effort put in.
There are online brokers who offer a comprehensive social trading experience but you can take some individual elements from the concept and apply it to a different broker who may not offer any kind of social trading facets on their platform.
As far as actually putting social trading into practice it all comes down to the platform you are using and the experienced traders you are subscribed to. Once you have taken a look at some different traders and checked out their recent successes over the past 12 months you can then begin to start copying their trading strategies.
Take a close look at the details of these strategies like where the experienced trader you are copying has set their stop-loss order for or how much they have leveraged. All of these details are important although you can rely more on automated software to help you copy these trading strategies if you really don’t want your hand on the wheel at all.
There are a range of different markets for you to use while social trading online that mainly include forex, indices and commodities. You can also use social trading for CFDs so finding the best CFD broker Australia would also be a big plus.
That’s really all there is to social trading online. You need to decide how much involvement you want to have in the actual trades and trading strategies but for the most part people like this form of trading precisely for the reason that they don’t have to do a whole lot to see profits from their trades. The real pull of social trading is the fact the experienced trader is ultimately doing all the work while you simply follow suit on what they are doing.
If social trading doesn’t sound like it’s up your alley then check out the best cryptocurrency broker Australia instead.
How to Find the Best Social Trading Brokers
But how can you find the best social trading broker online? There are a couple of factors to consider when finding the best social trading broker around but that is why we are here. We help you to locate the best social trading broker that will provide you with a platform that is easy and safe to use.
At Wetten.com AU we want to cut out the hours you would have spent online searching for the best social trading broker. We do this in a couple of ways namely with our extensive broker reviews that we conduct of each broker and what features they offer on their site.
We also have a fantastic comparison tool that will help you to narrow your search when looking specifically for social trading websites. We take it one step further by compiling our rankings of the best social trading brokers around so that you can see exactly who has been rated highly by our expert reviews.
You can also take it on yourself as well when trying to look for the best online social trading brokers. Not all brokers in Australia will offer a feature that allows for social trading on their platform. So, the best way for you to start looking is by checking that the broker you are interested in using offers a comprehensive social trading feature.
With that being said we still recommend checking out our reviews because we have already done all this research for you. All in all, you can find the best social trading brokers on our Wetten.com AU site with our online brokers comparison tool.
Benefits of Social Trading Australia
As we mentioned before social trading is a great way for inexperienced traders to get a leg up in the financial markets. There are a number of benefits to using social trading online. The fact that social trading, once you get the hang of the concept, is exceptionally easy to do is one of the main reasons people enjoy this form of day-trading.
Another reason that social trading online is a benefit is due to the fact that you are generally trading in a community. Why is this a benefit you may ask? It is because it helps you to remain level-headed and to avoid making emotional trading decisions when the market or asset dips in value.
Discussing the market factors and activity amongst other like-minded traders can help you to cut out emotion-based trading but also any bias you might have had towards certain trades.
Copying the very best
However, the real benefit here is that you can copy traders who have had immense success in the past. So, while you are riding their coattails to trading success you can also learn more about why their trading strategies are good.
Copying the trading strategies is the main purpose of social trading but it’s nice to know that you are also learning as you go which gives you the option to branch out into your own more autonomous trades in the future.
It should also be noted that the traders on these social trading platforms who have their strategies copied the most will receive bigger payouts from the broker as a result. You can look at this any way you want to but to use this seems like a genuine benefit to everyone involved.
If the trader receives bigger payouts from being copied then that trader will want to put in the utmost effort into their strategies so that more people will follow and copy them.
You can definitely get very used to simply copying these more experienced traders but we really do suggest that you put at least some effort into trying to understand the trading strategies and the financial markets involved. This can only serve to make you a better trader and help you to understand what it is you are copying.
Speaking of making you a better trader, we recommend taking a look at our article for the best futures broker Australia to buff up your knowledge of a different market and broker.
Shortcomings of Social Trading Australia
There are a few reasons that people don’t use social trading but to be honest they are few and far between. Our social trading review found that you will have to do some form of research before you start your copying process.
This does not mean that you should research the financial markets or trading statrfgeis in depth (although we do recommend doing this to some degree) but rather research the potential “experienced” traders that you want to emulate. We say this because there is no restriction to who can create a profile on these social trading platforms.
This means you need to be careful about who you decide to emulate and rather put the extra time in to assess these traders’ previous successes and failures over the past 12 months at least.
There are only a small number of experienced traders who are consistently successful so you need to do your homework on social trading online fully before you make a decision about what trading strategies to copy.
The Best Brokers for Social Trading Australia
Now that you know a little bit more about what social trading Australia has to offer you, we want to show you some of our favourite social trading brokers around at the moment. You can also take a look at our pick for the best options broker Australia.
There are so many different social trading brokers for Australian residents to choose from so we want to help guide you in the right direction to finding the best social trading platform out there. Here is a list of some of the best social trading brokers available to be used in Australia:
Why not kick off our list with what is arguably the best social trading platform available for Australian residents to use. eToro has become a stalwart of the social trading game as their platform is tailored to this kind of trading method. When eToro started they actually built the rest of the site around the core of their platform which was social trading. So, why do both experienced traders and those looking to copy strategies turn to eToro as their main trading platform?
First and foremost, the trading platform is exceptionally easy to use. New users and those unaccustomed to online trading, in general, will have no problems navigating around the eToro site. They continue to make life easier for their users with “The Social News Feed”, is a feature of the site that lets users follow the financial instruments and traders they like, interact with fellow members of the eToro community and much more.
eToro has also made it a level playing field for traders who are looking to have their strategies copied. It’s all about the time and effort you put in. The Popular Investor program on the platform rewards traders who have their strategies copied by up to 2% of their total “assets under management”.
There are few social trading sites that hit the nail on the head quite like eToro does. With over 1,000 assets available to trade, including both CFD trading and real stock trading opportunities it’s easy to see why so many people enjoy using eToro for their social trading online. The rates in terms of fees are very competitive as well which further enriches the overall feel of the social trading with this broker. eToro is also one of the best online stock brokers Australia you can find if that is something that is a must for you.
While eToro might be one of the most popular social trading sites around we can assure you that ZuluTrade are giving them a strong run for their money. ZuluTrade is another online broker that has curated features on their site that are purely dedicated to social trading methods.
Firstly, you can access the community of experienced traders on the site through the Traders tab where it shows you all the available traders to follow on the site. You can then navigate to the Social Charts feature, this is a place where the traders place comments about the trades they have opened or closed out and what percentage they finished.
You can check this feature out to find out more about the traders you want to follow and then organize them in lists with the UserLists section of the site.
You will then need to decide how to approach social trading by choosing whether you want to pick the best trader from the list and start copying yourself or use an automated system. ZuluTrade makes both of these options very straightforward for you.
As we mentioned, policing the best trader is made easy by the traders tab which features all the top traders and allows you to search for specific traders as well. If you are not confident in your own ability to pick a trader you can use the ComboPlus feature on ZuluTrade which will put your social trading on auto-pilot so that you literally don’t have to put any effort in.
Like eToro, ZuluTrade is an online broker that dedicates much of its platform and features to the benefit of social traders. The site is a great place to start out with your social trading as it is easy to use and easy to understand.
XM.com is another fantastic option for Australian residents to choose for their social trading online. XM.com has quickly become a top tier social trading platform. It has garnered more and more users over the past few years and there’s no surprise that it has become one of the best brokers in Australia.
XM primarily offers trading through some of the best trading platforms in MT4 and MT5. You can access and trade over 1,200 different assets for your social trading needs through the MT4 and MT5 platforms respectively.
XM.com does not provide the same kind of social trading centric options like eToro and ZuluTrade but it does allow users to execute social trading methods indirectly through external features. Users can use the EA feature through the MT4 platform and can also follow experienced traders through social settings like the MQL5 community where you can still copy and import experienced traders strategies.
So, while XM.com may not be a social trading platform outright, the reason we have added it to our list is because the broker is easy to use and traders can still use social trading through the excellent MT4 and MT5 trading platforms. You’ll need to put in a little more effort to do social trading online with XM.com but it is still absolutely worth it just based off of how great the website is and how intuitive the trading platforms are.
Where a broker like ZuluTrade is wholly focused on their social trading aspects, a broker like FXTM creates a beautiful symbiotic balance between their social trading features and individual trading. They do this by combining the traditional MT4 trading platform and their own FXTM Invest feature.
Through the FXTM Invest feature users can access a fully fleshed out social trading network where they can pick and choose what experienced traders to copy at will. The feature makes life so much easier in this regard as you can find all of the information in one place.
If you are looking for a broker that provides you with social trading capabilities but also gives you the option to individual, autonomous trading then FXTM is the broker for you.
Conclusion – Finding the best social trading websites
That brings us to the end of our piece on the best social trading websites in Australia. Social trading can be a fantastic option for those day-traders who don’t have the time to do the research and strategy planning themselves. You can reap all the benefits while doing none of the work.
Remember, it is still worth you doing the necessary research on the brokers that you would like to copy to better ensure a safe social trading experience.
All in all, if you are unsure about where to start looking for the best social trading brokers in Australia we highly recommend going with either eToro or ZuluTrade. These two brokers were centered on social trading and as such offer the best social trading features you can find right now.
If you would like to learn more about the different brokers and markets available we can teach you how to find the best online brokers for beginners in Australia or the best ETF brokers Australia as well.
Social Trading Review FAQ
❓How do I find the best social trading brokers online?
At Wetten.com AU we help you to find the best social trading brokers in Australia. Our reviews, broker comparison tool and guide to social trading will help you to make an informed decision about what broker is going to do the best job for you.
👀What should I look out for in the best social trading companies?
It can be tough to know exactly what a good social trading broker looks like but at Wetten.com AU we show you exactly what to be looking out for in the best social trading companies. In our broker reviews, we give you the breakdown on what features and aspects of the site you should be checking for.
👍What are the advantages of using the social trading method?
There are a number of different reasons why so many people enjoy using the social trading method. Our beginners guide to social trading will point out exactly what the advantages are of using such a method and you can make the most of your social trading in general.