Social Trading UK Guide 2022 Author: Tom Chen 20 May 2022 Please note that we are not authorized to provide any investment advice. The information on this page should be construed for information purposes only. We may earn commissions from the products mentioned on this site. The Internet has been responsible for many positive changes and innovations including global social networking that provides new methods for sharing information in an online community. Facebook, Instagram, Twitter, and LinkedIn have become absolutely critical to our business and social environment. In recent years, copy and social trading platforms have made it possible for anyone to join the pool of online trading without having any prior experience and knowledge. Social trading is not only a trend, but it is a great trading tool for newbies and experienced traders that want to share information and ideas. In this guide, we’ll go over the basics about social trading in the UK. We’ll explain how it works and suggest popular platforms and brokers. Table of ContentsContents [show] What is Social Trading? A social trading platform works by gathering a community of investors and traders, where they get to interact with other members and share information. Essentially, a social trading network connects traders around the world and gives users the opportunity to get information about the market and even follow other traders’ trading-activity using a tool called copy trading or mirror trading. eToro was most likely the first social trading platform to be introduced to retail traders in 2007. Since then, other platforms have emerged, such as ZuluTrade, NAGA Trader, AvaTrade, and DupliTrade. How Does Social Trading Work Essentially, a social stock brokers works on the same basis as any other social networking application but with a focus on trading and investments. It gives users the opportunity to get information about the market from members within the community, share ideas, and mimic trades of other members in the community. A social trading platform is, therefore, built-in software that enables experienced traders to share trading strategies, ideas, market insights, economic events, and duplicate each other’s trades. Once a trader registers on a UK social trading platform, he/she will then be able to create their own profile, the same as any other social network. When you sign up for a social trading platform, it is important that you personalize your account before you start interacting with other members to see relevant posts and market news on your news feed. Moreover, popular trading social networks offer a market sentiment tool that shows how many traders are long or short on a particular asset or market. Social Trading & Copy Trading Conceptually, social & copy trading have the same goal but they are different in many ways. The key difference is that social trading focuses on sharing trading information via a social trading dashboard where investors can post on their wall, share trading ideas, market news, technical analysis insights, and even discuss with each other. Copy trading, on the other hand, involves an automatic mechanism where one investor copies the trades of another investor. This happens via a connection of your account with another trader’s account. You will still be able to manage your portfolio including the amount of investment, the risk, the market and change the investor you copy at any time you want, so in many ways, it is very similar to any type of fund manager. Though copy trading and social trading are actually quite different, they go hand by hand since copying trades of others is an integral part of social trading networks. Social Trading Example For an example of social and copy trading, let’s say that you are keen to invest in the forex market and the cryptocurrency market. However, you are not yet ready to trade the forex nor the crypto markets and you lack the trading skills and knowledge to compete with top traders. In that case, you will be able to get information about these markets on any social trading platform. If you visit a Forex social trading platform, then you’ll find a lot of information on each FX currency pair, including major, minor, and exotic pairs. On the eToro social trading platform, for example, you can navigate to the CopyTrader feature and locate an investor that specializes in forex trading in the UK or cryptocurrency trading. Features of Social Trading Social trading is growing as quickly, and for many good reasons. Let’s take a look at some of the key reasons why this trading technique has become so popular: Trading As a Group is Better than Trading Alone Before social trading platforms have emerged, trading has been an individual activity. While some traders may prefer to ignore social trading platforms, others may feel more confident in a community of investors, where they can not only interact with each other but also get quick access to market news. The collective knowledge enables users to get more trading ideas gathered from many investors and essentially benefit from a free flow of information without the hard work of searching for market news on financial sites. Copy Trading Copy trading is a great way to make the first step into the trading world. If you select the right investor/signal to copy, you can potentially make a profit by exploiting other investors’ trading skills. Copy trading is not only suitable for beginner traders, but also for professional traders that use copy trading to get trading ideas and expose themself to new markets and products. In that sense, you need to take into consideration that on a platform such as the eToro social trading platform, you will also be able to use the CopyTrading tool on a demo account and backtest an investor’s trading performance. Learning From Other Investors Another one of the many benefits of social trading in the UK is that you can actually learn from other experienced traders. Trading is a difficult skill to master and as such, it takes time and effort to help you understand when to get in and out of a trade. When copy trading, you analyze each trade and carefully observe the investor’s trading activity, eventually you have the potential to become a better trader. Earn Commission by Getting Copied Individual users without much experience can take advantage of experienced knowledgeable traders by copying their trades. But this is not the only way investors can benefit from social trading. If you are already a successful trader with a proven track record, you could take advantage of social trading UK platforms by allowing other traders to copy your trades. The majority of social trading platforms will pay a commission to the trader when trades are copied. Social Trading Platforms There is a number of social trading platforms available on the UK market today. Some of these platforms are more popular than others and offer more features and a large user base to keep investors engaged at any time. To help you pick a social trading platform, let’s take a look at four of the popular social trading platforms that operate in the UK as of 2022: 1. eToro eToro is the largest and most popular social trading platform in the world. As we mentioned previously, eToro was the first broker to launch social trading and throughout the years, the broker has grown to become a social trading network with more than 12 million registered users on its platform. Since its foundation in 2007, eToro introduced many unique top-notch social trading features. Its flagship product, the CopyTrader, allows users to locate top traders that may match your trading needs and mimic their trading activity by one click of a button. When you are looking for a specific trader you wish to follow, you will be able to navigate through a variety of parameters such as the trader’s P/L, risk, location, markets, etc. This tool will help you choose your ideal investment type and trading style. As a side note, it is important that you make good research in the selection of suitable traders to follow and copy their trades. On the other side, those who are willing to share their trades with other members are rewarded by eToro’s Popular Investor program. Simply put, the more copies a trader has, the larger the payout. eToro also offers CopyPortfolios, which are professionally managed, thought these require a $5,000 minimum investment. What’s more? Our eToro social trading review finds out that the broker has another unique feature, the Social News Feed. On this platform, you can basically post your own updates, trading ideas, share posts, and comment on other’s posts. You will also get notifications if one of the traders you copy posts something new. Finally, you have the possibility to interact with other members, open discussions, and follow other users. Besides being a social trading platform, eToro gives investors access to thousands of assets including shares, FX currency pairs, ETFs, cryptocurrencies, commodities, and indices. eToro is also heavily regulated by the Financial Conduct Authority (FCA) in the United Kingdom, by ASIC in Australia, and by CySEC in Cyprus and Europe. To get started in the UK, you’ll need o meet a minimum deposit of around £160. If you want to enjoy social trading on your mobile, eToro offers one of the popular trading apps on the market. Our Rating Visit eToro 75% of investors lose money when trading CFDs. Sponsored ad 2. NAGA Markets NAGA is another leading social trading platform with 600,000 users and 1,500 partners on its network. This platform was founded in 2015 and is amongst the top 50 ICOs (Initial Coin Offerings) of all time with more than $50 million being raised via a token sale. Users on NAGA’s platform can trade on over 500 instruments, including cryptocurrencies, indices, forex, commodities, share CFDs, real shares, and more. While the broker does not offer the tightest spreads on the market, it offers a range of trading platforms that include the MetaTrader4, MetaTrader5, and the NAGA proprietary platform that is available on any web browser and smartphones. When it comes to social trading features, NAGA offers the AutoCopy tool which allows users to automatically copy trades of other experts. If you are an experienced trader who wishes to get rewarded for the trades you share with other members, you will get an additional income on top of your trades. Additionally, NAGA’s trading dashboard is an all-in-one place for investors where they can get access to market news, users’ posts, discussions, market insights, trading signals, and the NAGA messenger, which is the world’s first trading messenger. NAGA Markets is authorized and regulated by the Cyprus Securities and Exchange Commission (license number 204/13). The minimum deposit required to start with NAGA is $250 or equivalent. Visit NGA Markets Sponsored ad 3. AvaTrade (via ZuluTrade) AvaTrade is a well-known forex and CFD broker that offer social and copy trading services via ZuluTrade, a leading forex social trading platform. The partnership with ZuluTrade enables AvaTrade’s users to trade on the ZuluTrade’s web- platform, or implement their social and copy trading tools on the popular MetaTrader4 platform. This means that you can follow and copy successful traders, get a wide selection of signal providers, and be a part of a trading community. The ZuluTrade forex trading platform is not only easy to use and has a user-friendly interface, but also provides a huge list of traders to choose from, ranked by their trading success, and the number of followers they have. AvaTrade also offers some useful risk management tools such as the ZuluGuard that protects your account by monitoring the performance of the traders you follow and alerts you once a change in strategy occurs. Unlike eToro and NAGA, AvaTrade copy trading service via ZuluTrade focuses on the forex market, though you can auto trade other markets such as cryptocurrencies and shares. You can open your copy trading account at AvaTrade with a minimum deposit of £500 or backtest the ZuluTrade copy trading service with a $100,000 virtual money on a demo account. Our Rating Visit AvaTrade Sponsored ad 4. IG Markets Founded in 1974, IG is a UK-based broker that offers a plethora of social and copy trading features. To start with, the broker gives you access to the IG Community where investors and traders share ideas and discuss market opportunities. You will be able to view and participate in an online trading forum which is useful for getting information on upcoming events in the market and tips from more experienced traders. Then, if you are opting for the popular MetaTrader4, you can install a tool called Sentiment Trader that displays how many traders are long or short on a particular asset. IG also enables users on its platform to copy trades of other investors by using a trading signal service that sends trading suggestions based on technical or fundamental analysis. The IG’s signals service comes directly from two third-party providers, Autochartist and PIA-First. Finally, IG has a trading alert service that is completely free, automatic, and customizable sent to your email, phone, or push notification on your desktop. What really sets IG apart from other brokers in the industry is the huge range of more than 13,000 shares and over 15,000 markets to trade on. It is also one of the most heavily-regulated brokers in the industry with licenses from the Financial Conduct Authority (FCA), Federal Financial Supervisory Authority (BaFin), and the Australian Securities and Investments Commission (ASIC). UK investors need to meet a minimum deposit requirement of £250 in order to open an online trading account. Visit IG Sponsored ad Social Trading Fees The costs of social trading depends on the platform you use. Here’s how the social trading platforms compare in terms of charges. Social Trading Broker Commission Deposit Fees Inactivity Fee Withdrawal Fee eToro £0 if trading stocks & ETFs, variable spread for CFDs 0.5% conversion fee $10 per month after 1 year $5 Naga Variable spread + 10% commission on ETFs & 20% on stocks £0 £0 $10 AvaTrade Variable spread Free Flat £50 after 3 months, £100 after one year £0 IG £0-£10 if buying and selling stocks, variable spread for CFDs Free (0.5%-1% on credit cards) £12 per month after 2 years £0 Social Trading Risks Social trading in the UK might be an effective trading tool, particularly for beginner investors, but coping the same trades of another top trader on a social trading platform does not necessarily guarantee success. Moreover, social trading platforms are flooded with newbie investors that post unreliable news and trading insights. Some of them often try to influence an instrument market’s price for their own interest. As such, we suggest that you follow investors with a positive return over a duration of at least 6 months and determine whether you want to focus on day trading activity or long-term investment before you choose a trader to follow. Additionally, it’s advisable that you use risk management tools such as eToro’s CopyTrade stop-loss rate or ZuluGuard protection tool. This will significantly minimize the chances of failure. How to Start Social Trading So now that you understand how social trading works and what are the advantages of social trading, we are going to show you how to open an online social trading account using a broker. Step 1: Open a Social Trading Account Your first port of call will be to sign up for an online trading account. You’ll have to visit the broker’s website and click on the ‘Join Now’ button. Then, you will be required to enter some basic personal information such as your name, email address, date of birth, phone number, and National Insurance Number. Step 2: Verify Your Account Brokers licensed by the UK’s Financial Conduct Authority (FCA), require you to verify your identity before you can start trading. The process includes uploading a clear copy of your passport or driver’s license as well as a copy of a utility bill or financial statement. Step 3: Fund Your Account Once the account has been approved, you can deposit funds into your account in several ways. This includes debit/credit cards, e-wallets (Paypal, Skrill, Neteller), and a bank wire transfer. Step 4: Copy Top-Performing Traders and Start Day Trading Now that you have funded your account, you can locate one of the experts on the platform. On the dashboard, navigate to the ‘Copy People’ tab on the left side menu. Then, you will able to choose the location of the trader you wish to follow, the market, and the return in percentage during various periods of time. Once you have set your mind on one of the traders, click on the ‘Copy’ button and then you will be channelled to an order form. In the order form, you’ll need to enter the amount of the investment in the amount field and set a rate to stop copying the trader if the value of the portfolio falls below it. Conclusion Social Trading in the UK might seem appealing for those who want to enter the market without having any experience or knowledge, and for a good reason. Some investors find social and copy trading very useful and effective trading tools as these social trading networks basically provide access to information that the average trader cannot get on any other platform. But like any other type of investment, social trading carries a high level of risk. Whether you choose to copy people or use a UK social trading platform as a source of information, you should do your own market research, find trustworthy people to follow, and manage your account independently. FAQs How does Social trading work? Social trading works similarly to other social networks, such as Facebook, Linkedin, and Twitter. This is a form of networking that allows investors to interact with each other, share information, trade ideas, and copy trades of other users on the platform. What is a popular social trading app? We have reviewed most of social trading platforms available in the UK. eToro remains a popular choice for social and copy trading app, followed by NAGA, ZuluTrade, and IG. Is social trading safe? Yes, social trading is completely safe. Copy/social trading is, in fact, a legit trading strategy and as long as you are trading with a regulated broker and choose a trustworthy investor to copy, social trading is safe and secure. Is social trading the same as copy trading? Well, you may say that copy trading is the main feature of a social trading platform. Social trading is a general concept of sharing information that can work in different methods including copy/mirror trading. How much money can you make in Social trading? This highly depends on the amount of your investment and the trader you choose to copy. When you use copy trading, you're choosing to automatically copy the trades of another investor, meaning the trading performance of another investor will determine your success or failure. Can you do social trading on MT4? Yes, the Trading Signals tool in MetaTrader 4 (as well as MetaTrader5) allows you to automatically copy trades of other traders. Luckily, many successful traders share their trading activity to public access either for free or for a small commission.