Social Trading UK Guide 2024

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.

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.

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.

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.

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 2024:

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 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 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