Social Trading: Copying the best traders

Social Trading is a totally new way of trading on the Forex that uses the sharing of information and knowledge between different investors on a single trading platform. Launched not long ago originally by the broker eToro, the idea has been adopted by other brokers and attracts increasing numbers of traders who seek to make profits on the Forex without having to spend much time on their investments or learn to complete analyses or even trade in a straightforward manner.  

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75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
Social Trading: Copying the best traders

What exactly is ‘Social Trading’?

Social Trading as we know it today could not have existed without the introduction and development of the online trading platforms. In fact, although the Internet is used by us to complete financial transactions, it can also be used to find useful information relating to our investments, particularly through the exchange of information with other traders on forums or social networks online.

Social trading was born from the idea of combining these two components in one single space. Basically, by giving traders the opportunity to advise each other and exchange tips directly on their investment trading platform.

However, social trading goes even further as it enables you to follow the positions of other traders on the platform and copy the positions of the best of them and thereby benefit from the same level of profits (as well as experience their losses).


The function of social trading: How to copy the best traders?

Of course, for social trading to become an essential tool for Forex traders, a simple and ergonomic solution was required that could be used by all traders. Let us explain how social trading works:

The idea is therefore to enable certain traders to become ‘leaders’ by agreeing to share their positions and strategies with other traders registered on the same trading platform. For the others the principle is therefore to be able to consult the performance of the best traders.

However the functions offered by the brokers for social trading do not stop there. In fact, apart from simply consulting the results of the best performing traders, it is also possible to follow one or even several individual leaders and even automatically copy all their positions.


The advantages of social trading:

Social Trading and the opportunity it offers to follow and copy the best traders offers a number of undeniable advantages, here are the major ones:

  • However, social trading goes even further as it enables you to follow the positions of other traders on the platform and copy the positions of the best of them and thereby benefit from the same level of profits (as well as experience their losses).
  • Social Trading also enables you to save time by not having to following the prices of the assets as this method incorporates automatic trading managed by others.
  • Finally, this function enables you to learn different strategies as you can consult the details of different operations completed by the leader traders.


Why is it advantageous to follow other traders?

On the foreign exchange market, profitable strategies are unfortunately much rarer than losing strategies. To consistently earn money on the Forex requires a certain experience of the market together with a solid trading knowledge. Due to these influential factors, it is often very difficult to generate a benefit quickly when starting to trade and it can even take months, or years, before becoming highly efficient at short term investments.

This is why it can be very beneficial for beginner traders to follow the trades from the best traders. By observing the way in which these traders invest over a given period, it becomes easier to understand the logic of their Forex investments. Therefore, following other traders in real time allows all traders, even beginners, to learn quickly and in a ‘hands on’ manner, without having to spend long hours learning theory.


CopyTrader or how to copy the best traders:

Let us first look at the exact operation of eToro’s CopyTrader function. As indicated by its name the latter enables you to copy the traders that you choose. Basically, this social trading software enables you to initially obtain a list of the best traders on the platform with, for each of them, the details of positions taken and the profits achieved.

Using this list you can simply choose to observe these traders and even ask them questions so you can learn and thereby implement winning strategies using similar analyses, or directly copy their trades using CopyTrader.

CopyTrader enables you to copy several traders at the same time. Your positions will be taken automatically and in proportion to those of the traders that you have decided to copy. Of course, the amount invested on each trader will also be in proportion to your total investment capital available. 

You therefore have nothing further to do apart from follow your trades in real time.


Why use the CopyTrader function of eToro?

EToro’s CopyTrader function offers numerous advantages for both novice traders and those with some experience that wish to improve their profitability rate.

For the first, the fact of copying the best traders enables them, right from the beginning of their online trading experience, to make profits without any prior knowledge of the markets. While your trades are being automatically completed you can take the time to study the technical and fundamental analyses and learn about the strategies implemented by these experienced traders.

For the second, the CopyTrader function enables them to cover certain possible loss risks through the guarantee of some profitable trades which thereby leaves a margin for manoeuvrability and error.

Social Trading through eToro in fact offers other functions with for example the opportunity to chat with other traders including those you are following. Do not hesitate therefore to be curious and ask their reasons for taking a particular position. You can also exchange your opinions with other platform users with the objective of increasing your knowledge.


How to see and follow trades from the best traders

The act of exchanging information with other traders is generally known as “social trading”. But where and how is this social trading practised? There are various ways in which you can follow the performance of other traders. The most frequent, but also the most complex, consists in meeting other traders on discussion forums or blog sites dedicated to finance and exchanging information with them in the hope of obtaining some advice. But this method remains very theoretical and does not really allow the observation in detail of their trading methods.

Another more recent method implemented by the broker eToro is a tool that enables both the possibility to see the performances of other subscriber traders on the platform in real time as well as being able to follow one or several particular traders.

Thanks to this tool, you can decide to follow the movements of the best traders on the platform and even imitate them in order to quickly generate a benefit and so benefit from their market knowledge and experience.

One great advantage of this tool is that it allows you to directly access interesting information and follow other investors’ movements and performance over a long term basis.


A unique training, simple and efficient

To summarise, the act of seeing and following other traders’ movements and, more especially, those of the best or most profit generating traders allows you to both make a profit more quickly (even as a beginner) as well as learning about Forex trading in a direct ‘hands on’ manner..

No more need to spend hours trying to understand the market complexities and devising trading strategies using an e-book or a theoretical handbook. You can go directly to the practical stage by observing the causes and the effects of success through other traders experience. Generally, the progression recorded is significantly higher than with traditional trades that do not use eToro’s OpenBook.


How to choose the right trader to follow?

As you certainly know, certain brokers such as eToro have implemented a social trading system that offers the opportunity to follow and even copy the positions of the best traders on the platform. But the choice or which trader(s) to follow remains entirely up to you.

It can therefore be difficult to make the right choice and you should take time to reflect carefully before launching yourself into trades.


How can a good Forex trader be defined?

On the foreign exchange market, the definition of a good trader is quite delicate as it takes into account a certain number of criteria, here are the major ones:  

  • The global performance: This is equally difficult to determine but corresponds globally to the ratio between the amount invested and the amount won less the amount lost. The result of this operation is displayed in the form of a profit percentage. Of course, you do not have to worry about calculating the figure yourself as the platforms offering social trading advise you of the result automatically for each of the leading traders subscribed to the programme.
  • The leverage effects used: These determine the level of risk the trader takes, among other things. In fact the higher the leverage effect, the higher the risks of losses too.
  • The variety of assets traded: The good traders are not necessarily those who trade a great number of different assets. Sometimes it is preferable to specialise in one type of asset and be capable of swiftly and surely predicting the future movements than to trade in a wide variety of different assets. However it is dangerous to trade in only one and the same asset as it is necessary to diversify investments to minimise the risks.


Some advice on choosing the trader(s) to follow:

Certain platforms such as eTorro offer you the opportunity of following the best traders on their platform, you can even follow several traders simultaneously. It is therefore judicious to base your choice on different investor profiles so you can test their respective strategies and performance over the long term. For the rest, here is some advice on choosing your leading traders:

  • Firstly, aim to choose a trader that takes moderate risks. For this, check the leverage effect they use and the part of their capital they invest in each operation, particularly if you have a substantial capital. If you have a smaller capital available you should favour the traders that complete larger operations as this will generate more profits proportionately to your initial amount.
  • You should also remember that this trading method is not only aimed at you making profits without speculating yourself. The point of this technique is that you can learn through studying and analysing the strategies implemented by the trader(s) that you follow according to the generated performance. Following and copying the actions of an experienced and efficient trader is far from being the best way to learn how to speculate on the Forex.


What is the WebTrader platform from eToro?

The WebTrader trading platform of the broker eToro is, as its name indicates, a platform that enables online speculation on the Forex and CFDs, without having to download any software onto a PC or Mac. This 100% online solution offers the advantage of enabling traders to access markets from any computer, not only their personal computer, using a highly secure interface.

This method equally offers the advantage of enabling new traders to try trading on eToro without having to install any software, also a demo version of the WebTrader platform is available free of charge.


Advantages and functions of the eToro WebTrader:

Here is a summary of the advantages and particularities of the WebTrader platform of eToro: 

  • As we have noted this platform is directly accessible online without download.
  • The WebTrader platform is also entirely customisable and therefore enables the configuration of the various tools and options according to your method of speculation and type of trading.
  • It proposes numerous tools and practical functions such as analyses and advanced charts, ergonomically presented making it accessible and usable by everyone, whatever their level of experience.
  • Finally, it is accessible 24/24, 5/7, thereby offering the possibility of trading wherever you are throughout the world on all the international markets.


A strategic choice from eToro

The choice by the eToro broker of implementing Copy Trader was particularly influenced by the desire to attract beginner traders, often too lost to start trading. Thanks to this new tool, the risks are diminished for the beginner and they benefit from a collaborative trading to learn investing by copying the best.

On the other hand, the broker insists on their aim to be transparent on what happening on the platform. Therefore, everybody wins with this tool which enables responsible trading whilst encouraging individual traders to think on how to improve their strategy and so better master the risks taken.

To perfectly fit the beginner traders’ requests, eToro has watched the platform’s implementation carefully to ensure the simple and ergonomic display of the information, accessible to all. The targeted objective is therefore quite large as now even regular users can make use of the experiences of the other traders to improve their strategies or even diversify their investment portfolios by spotting profitable assets they could have missed.


Social trading using WebTrader from eToro:

One of the most popular particularities of the eToro online trading platform is of course its social trading function. In fact, using WebTrader, you can start to make profits online without any particular knowledge of the markets thereby profiting immediately from the advantages of the Forex and CFDs.

In fact, thanks to the social trading system, you can directly follow the best traders on the platform and copy their positions without having to do anything else apart from follow the progress of the increase in your profits. In this way you can train online without having to suffer the losses generally made by beginner investors.

Social trading goes even further by allowing you to communicate with other traders directly online and ask them questions concerning their strategies. In this way you will have a more complete overview and understanding of what online trading can be like and how to analyse markets and recognise rising and falling signals.

Using the WebTrader platform therefore offers certain major advantages that it would be a shame to ignore.

How to start using CopyTrader?

To use the CopyTrader function and start copying the best traders you simply need to join the eToro trading platform by opening an account. You can directly access the CopyTrader function as soon as you are logged in to your trading account.

Start copying the best traders now!
75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.