XM Forex Penguin

XM Forex Penguin

Social Trading 2024

Looking for a leg up as a forex trading novice? One way you can get a flying start with your FX trading career is to try social trading, also referred to as copy trading or mirror trading.

In this guide, we are going to introduce you to the concept of social trading in detail.

We will tell you how its works, and what the benefits and drawbacks are of using copy trading features.

Trying to find forex brokers that offer social trading? Check the list below for our top recommendations.

Top Social Trading Forex Brokers

  1. XM
  2. Roboforex
  3. Instaforex
  4. Mtrading
  5. HFM

If you are interested in starting trading forex without depositing your own money, you can visit XM no deposit bonus to learn how to kick start your trading for free.

What is Social Trading?

The phrase “social trading” is a broad umbrella referring to any tool or system that allows you to watch what other traders are doing and mimic their investment decisions.

Two other terms for this are “copy trading” and “mirror trading.” Some people define these terms differently, but you can use them all synonymously.

The benefit of social trading is that instead of having to do all of the hard work of trading analysis and strategizing all on your own, you can simply piggyback on the work that another successful trader is already doing.

When you use copy trading for forex, you directly replicate one or more trades that another trader is taking.

Hypothetically, you can copy trades manually. But in this context, we are talking about doing it automatically through your trading platform.

If you want to participate in copy trading, you decide the following:

  • Which trader you want to copy.
  • What percentage of your funds you want to risk on copying their trades.
  • What asset classes you want to invest in.

Once you input this information and activate copy trading, your platform will automatically execute matching trades on your behalf.

At any point, you can increase or decrease your risk, or stop copying the trader.

You can also participate in the copy trading system by making your own trades available to copy.

What Are the Benefits of Social Trading?

Here are the advantages of social trading, mirror trading, and copy trading:

  • Lean on more advanced traders’ experience while you are building your own. It takes years of effort to become a successful forex trader. But you do not want to be waiting years to profit from the forex markets. Social trading lets you lean on the experience of other traders who have put in years of effort as you are developing your own trading skills.
  • Grow your account more rapidly as a newbie. When you are still struggling to place consistently profitable trades on your own, it can be tough to grow your account. And if you are starting out small, that may mean a long road ahead. You might be able to shorten that road a bit by copy trading in the meantime. When you are ready to trade using your own strategies and setups, you will hopefully have more money to invest.
  • Learn more about forex strategies by observing. Just by watching the setups, other traders pursue, you can start to understand more about what constitutes a good trade. That can help you in your own development as a trader.
  • Save time and effort. A lot of people enjoy copy or mirror trading for the simple reason that they are fast and easy ways to invest. It takes a lot less time and effort to select a few traders or algorithms to copy than it does to monitor charts and identify trade setups. For that reason, copy trading is popular even with intermediate and advanced traders.
  • You are in control. Another nice thing about social trading is its flexibility. It can be completely hands-off and effortless. But if at any point you want to get back in the driver’s seat, all you have to do is stop copying the trader and get back to trading manually.
  • Reduce emotional involvement in investing. Do you have a hard time regulating your emotions when planning and executing trades? Copying other traders may be less emotionally taxing for you, leaving you less prone to impulsive decision-making. Of course, this is something you will still need to work on so that you are not always at the mercy of your emotions.

What Are the Drawbacks of Social Trading?

Now you know the benefits of social trading. But does it have any drawbacks? Here are a few potential disadvantages.

  • If you are getting information about trades from a source that isn’t your trading platform so you can manually copy trades, you cannot be sure if it is legit. If the trader has a strong reputation, you can probably trust them—but there is no hard proof that they are taking the same trades they are advocating that you take. If you want to avoid this issue altogether, just copy trades automatically through your platform. Then you know the trader you are following is really placing those trades.
  • Even the best traders can make mistakes or have runs of bad luck. Copying successful traders can produce great results, but remember—past performance does not guarantee future results. So, no matter how selective you are, and no matter how skilled the traders you copy might be, you may still experience losing streaks.
  • Traders may be tempted never to develop their own skills. Finally, the ease with which you can copy trade might tempt you to just follow other traders instead of developing strategies of your own. While that might work for the short term, in the long run, you are going to want to be able to plan and execute your own trades. That way, you are not relying on others all the time, and if something goes wrong, you can address it and get back on track.
  • In volatile conditions, copy trading may not always work out. There can be a delay of minutes between when the original trader places a trade and when the system executes that same trade in your account. In some cases, that could cause you to experience a loss even in scenarios where the copied trader wins.

Is Social Trading Right for Me?

Social trading may be right for you if:

  • You are a beginning, intermediate, or advanced trader.
  • You do not have a lot of time to plan trades.
  • You are still working on learning how to trade, but want to get a head start placing trades now.
  • You are trying to grow your account and could use a leg up.

Social trading may not be a fit for you if:

  • You want to do everything yourself and have as much control as possible over the trading process.
  • You trade on short timeframes and/or during volatile times. Delays in execution in such cases might cost you your profits.

Consider Letting Other Traders Copy You Too

As your experience with forex trading grows, you may become skilled enough to offer other traders the opportunity to copy you.

There are a couple of reasons you may want to consider doing this. The first is that it gives you a chance to earn commissions. That means more money for your own trading.

The second is that you will be helping out others the same way that the traders you copied helped you.

Paying it forward can be a good feeling and a reward in and of itself.

Forex Copy Trading FAQ

Let’s answer a few frequently asked questions about forex social trading.

✅ What is the best social trading platform in forex?

We recommend trying out any of the sites we recommend on this page. Just click on any of the links to join.

✅ In what other ways can I make trading more social?

You can sign up on forex forums, join forex communities on social media websites, or sign up for trading groups that work together using Skype, Discord, or other chat services. These options offer you a more personal, collaborative approach where you and other traders can work together and copy each other. They may be a great fit if you all use related strategies.

✅ Are copy trades instantaneous?

No. There may be a delay. You should check with your broker to find out how long the delay will be on average.

✅ Do I have to pay for copy trading?

You may need to pay a commission to the copied trader.

Get Started With Forex Social Trading Now

Now you know what forex social trading is, and you are familiar with the similarities and differences between copy trading and mirror trading. Moreover, you are acquainted with the pros and cons of trading with social features and tools.

Ready to get started copying top forex traders? Click on any of the links in the top-recommended forex social platforms to begin.