Social Trading: How to Benefit from the Wisdom of the Crowd

Trading concepts

Social trading allows investors to follow and copy the trades of other traders, usually more experienced ones, in real-time or near real-time. Platforms offering social trading provide a social network-like environment. Thus, you can interact with expert traders, share their trading ideas, and follow each other’s trades.

So, what are the benefits of social trading? How to effectively use this trading technique? These are the questions we are going to give answers to in this article. Let’s begin right away.

Social trading explained

As mentioned earlier, social trading enables you to copy the trades of your favorite traders. In fact, it is the main goal of this form of trading to help novice traders to learn from more experienced traders. Thus, you can improve your trading skills by observing and copying the trades of the most successful traders. In addition, social trading allows traders to diversify their portfolios by investing in different markets and asset classes.

There are certain platforms that give you access to social trading. Additionally, these platforms, typically, provide a range of tools and features. For instance, you have access to performance metrics of individual traders, rankings, ratings, etc. These tools and features help you identify the best performers to follow and copy. Some platforms also allow traders to communicate with each other and share their trading strategies.

This form of trading has become increasingly popular in recent years. Why so? Because it offers a more accessible and user-friendly way for novice traders to enter the financial markets and potentially generate returns. However, it is important to note that social trading carries risks, and traders should carefully evaluate the performance and track record of other traders before copying their trades.

Social trading isn’t as simple as it seems

Isn’t it an excellent idea to use social networks and trading platforms to maximize returns? Of course, it is. Additionally, sharing ideas, strategies, and insights with each other are also beneficial. It is a great way for beginners to learn from experienced traders and get involved in the trading community. However, social trading isn’t just a passive way of trading. You cannot expect to make money by just following other traders. There are certain things you have to do by yourself to be successful in the long run. The following tips will guide you on how you need to tackle social trading.

Your tasks for effective social trading

Choose the right social trading platform: There are many platforms available, such as eToro, ZuluTrade, and Tradeo. You should choose a platform that suits your trading needs and preferences. Specifically, look for a platform that offers a wide range of traders to follow, transparent statistics on their performance, and low fees.

Follow the right traders

When choosing traders to follow, look for those with a consistent track record of profitability over a significant period of time. Avoid traders who have had large drawdowns or inconsistent performance.

Create a trading plan

Before you start trading, create a trading plan that includes your goals, risk tolerance, and trading strategy. Stick to your plan and don’t let emotions influence your trades.

Practice with a demo account

Most platforms offer demo accounts that allow you to practice trading with virtual funds. This is a great way to test your trading strategies and get comfortable with the platform before you start trading with real money.

Diversify your portfolio

Don’t put all your eggs in one basket by following just one trader. Instead, spread your investment across several traders to reduce risk and increase the chances of success.

Set realistic goals

Don’t expect to get rich overnight. Set realistic goals and be patient. Remember that social trading is a long-term strategy, and success takes time.

Stay up-to-date with market news

Keep up-to-date with market news and events that may affect your portfolio. This will help you make informed decisions and adjust your strategy accordingly.

Learn from other traders

One of the benefits of social trading is that you can learn from other traders. Follow experienced traders who have a proven track record and observe their trading strategies, risk management techniques, and market analysis.

Learn from your mistakes

Even experienced traders make mistakes. Learn from your mistakes and adjust your strategy accordingly.

Build your trading network

Engage with other traders on the platform and build your network. You can share your ideas and insights with others, ask for feedback, and learn from their experiences.

Manage your risk

Always manage your risk by setting stop-loss orders and limiting your exposure to any single trade or asset. Don’t risk more than you can afford to lose.

Monitor your performance

Keep track of your trading performance and analyze your trades to identify areas where you can improve. This will help you to refine your trading strategy and achieve your trading goals.

Benefits of social trading

Social trading can be a great way for beginners. There are numerous benefits of it such as:

Social trading reduces learning curve

By following successful traders, novice traders can reduce their learning curve and gain experience faster. Platforms for social trading often provide tools and resources to help users identify successful traders to follow.

Social trading gives access to market insights

Another great advantage of this form of trading is that it allows traders to access a wealth of market insights from other traders, including their analysis, strategies, and predictions.


It also allows traders to diversify their portfolios by following and copying multiple successful traders, who may have different trading strategies and risk tolerances.

Risk management

Social trading platforms often provide tools to help traders manage their risk, such as stop-loss orders, risk management calculators, and risk management guides.


It also enables traders to save time by following and copying other traders’ trades instead of conducting their own research and analysis.


It creates a community of traders who can learn from and support each other, share trading ideas and strategies, and discuss market trends and news.

The wrap-up

Social trading is a valuable tool for traders who want to learn from the most successful traders. They can also capitalize on the trading expertise of the gurus of the field. Therefore, it is an effective way to start your trading endeavor. Subsequently, you will be able to improve your trading performance by learning from experienced traders and copying their strategies.

Russell Crane

Russell Crane

Russell is an Algorithmic & Technical Analyst Trader @ PatternsWizard.
His passion is to share his knowledge about TA, patterns & more. Why hope for your trading to work when you can precisely know the performance stat of every pattern?

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