Social Trading UK Guide 2020

Trading can feel like a lonely activity sometimes, but it doesn’t have to be. With social trading, you can interact with fellow traders from throughout around the world. Social trading in the UK especially has exploded in popularity in recent years.

Social trading has advantages beyond just making trading more fun. It can also be a great way to learn new trading strategies and gauge the market’s excitement about a particular asset.

If you’re thinking about trying social trading in the UK, this guide is for you. We’ll explain everything you need to know about trading social networks and review social trading platforms you can get started with today.

What is Social Trading?

Social trading is a type of trading in which you get to interact with and learn from other traders. Those traders can be your peers as well as highly profitable professionals who can serve as role models.

The idea behind social trading in the UK is that you can learn from others. With a social trading platform, you can share updates about your own trades, explain your decision-making or ask other traders about theirs, or comment on a trade to give kudos or start a discussion.

How Does Social Trading Work?

Social trading in the UK works much like any other popular social network. Except instead of sharing photos or status updates, participants in a trading social network share trade data.

Following Other Traders

To get started with a trading social network, the first thing you need to do is find other traders to follow. The best social trading platforms have a discovery feature that surfaces traders you might like to follow based on the industries or assets you trade. You might also see top earning traders, who are some of the individuals on the network who have the best track record of winning trades.

Every trader has their own profile page, so you can easily follow up to learn more about any trader you’re considering following. The profile page might offer some background about the trader, such as whether they’re a hobbyist, part-time trader, or professional, what types of assets they prefer, and what trading strategies they use.

Importantly, you’ll also be able to see their current portfolio of positions and their history of trades. You can’t see how much money any individual trader has, but you can see their percent return for any trade along with how much of their total portfolio a single position represents.

News Feed and Comments

Once you’ve followed a handful of traders, updates from these traders will appear in your personalized news feed. This is usually a chronological feed of new trades, comments, and other activity happening on the trading social network. It’s a handy way to stay up to date with what other traders are buying and selling, which might give you ideas about trades of your own.

Another key aspect of social trading apps is that they are interactive. Other traders can follow you once you establish your profile. You can also comment on other traders’ activity. For example, you may want to congratulate another trader on a winning position or ask more about how they decided to enter that position.

Social trading in the UK can be a great way to get more information about trading strategies or to hear other traders’ thoughts on a company. Comments are public, so frequently other traders will weigh in. It’s relatively easy to spark a thoughtful discussion about the merits of a particular asset or trading strategy.

Gauging Market Sentiment

One additional feature that the best social trading platforms offer is the ability to quickly gauge market sentiment around an asset. On the popular eToro social trading network, data about traders’ open positions is gathered from across the platform. The result is that you can easily see what percent of traders are buying or selling that asset and factor that into your trading decision.

Copy Trading

Another key element of many social trading platforms is copy trading. With copy trading, you can go beyond just looking at another trader’s portfolio. You can actually mimic it with your own portfolio so that you profit when they profit.

Copy trading can be extremely useful for beginner traders in particular. Simply find a more experience trader with a winning track record and a risk tolerance that’s similar to your own. Then set up copy trading and sit back as the more experienced trader does the hard work of finding trading opportunities and interpreting market signals.

Even better, you can commit as much or as little of your portfolio to copy trading as you want. For example, let’s say you have £5,000 in your account. You can use copy trading to create a forex social trading portfolio worth £2,500 that runs on autopilot. Then you can manually trade your remaining £2,500 in, say, stocks to diversify your account.

Example of Social Trading UK

To show you how social trading works, let’s take a look at an example of forex social trading with eToro. We’ll focus in on the EUR/USD currency pair, which is one of the major forex trading pairs.

On the eToro social trading network, the EUR/USD forex pair has its own news feed. You can quickly scan through the feed to see what other traders are saying about this currency. In addition, eToro shows the number of traders who have this currency on their watchlists, what fraction of traders on the network currently have open positions, and what fraction of positions are bullish or bearish.

Based on all that information, you can decide whether or not EUR/USD is a good trade and whether to buy or sell the currency pair. If you’re not convinced that EUR/USD is the right trade for you, eToro also lists related assets based on what other traders are buying and selling.

Advantages of Social Trading

UK social trading has become incredibly popular in recent years. That’s in large part because this style of trading offers a number of advantages over traditional trading. Let’s take a closer look at some of the top benefits of social trading.

Learn from Other Traders

The best thing about trading on a social network is that it offers an opportunity to learn. Since you can see other traders’ portfolios, you can get a better sense for how to diversify your assets and how to decide how much money to stake on a single trade. You can also see when traders entered and exited trades, which provides insight into trading strategies and risk management techniques.

On top of that, you’re not limited to gleaning insights just from looking at someone else’s portfolio. If you don’t understand why a more experienced trader did something, you can simply ask! Social trading platforms make it easy to start discussions about everything from individual trades to broad strategies.

Know the Market

Another important benefit of UK social trading is that trading on a social network provides additional information about the market. Trade data on the social network is public, so you can know whether investors are bullish or bearish about an asset before establishing a position. That’s a huge help, since it’s often hard to know how other traders feel about a company, currency, or commodity.

In addition, it’s possible to use others’ research into an asset to help improve your trading decisions. You may analyze a trade one way, but another trader might post a different analysis of the same trade. By having access to that extra information, you can make better decisions and boost your win rate.

Catch the Latest News

Social trading platforms also offer a way to stay on top of market news. Events and announcements that could move the market are likely to show up in your news feed quickly. The sooner you know about news, the sooner you can react to it and potentially profit off of it.

Automate Your Trading

It’s hard to underestimate the advantage that copy trading offers. With this type of trading, you can put your portfolio in the hands of experienced traders with a strong track record of profitability. It’s like having a dedicated portfolio manager for free or at a fraction of the cost.

In addition, since copy trading is automated, it also takes a lot of the work out of trading. That alone is a huge advantage for part-time traders who need to balance work, home, and trading time.

Build a Trading Community

For many traders, the primary benefit of social trading in the UK has nothing to do with extra information or automation. Rather, the value of social trading platforms lies in their ability to bring traders together.

Social trading apps and platforms can foster communities among traders. Traders can provide congratulations after a good trade and consolation after a bad trade for each other. This sense of community makes trading significantly more fun over the long run.

Risks of Social Trading

The main risk of social trading is that it’s easy to lean too heavily on other traders. While it is tempting to believe that more experienced traders with winning records are right in many cases, a winning record is no guarantee that they are right about a future trade. Following what other traders say without doing your own analysis can be a recipe for trouble.

Along those same lines, it’s important to remember that you don’t know everything about other traders on the social network. Many people have multiple brokerage accounts, so it’s possible that the portfolio you see represents only a small fraction of a trader’s total portfolio.

Trading social networks can be useful tools, but it’s important not to use them as a crutch. Always do you own research. While other traders can be helpful, you are ultimately responsible for your own trading decisions.

Best Social Trading Platforms

Choosing the right social trading platform will make a huge difference in your experience. While many UK social trading platforms share a similar set of features, they can vary widely in how those features are brought to life. In addition, different brokers offer different assets for trading and have different pricing structures.

With that in mind, let’s dive into a social trading review for four of the top platforms in the UK today:

1. eToro – Best All-Round UK Social Trading Platform

eToro offers the overall best social trading platform in the UK. With eToro social trading, you get access to a highly customizable news feed and the ability to quickly see traders’ full portfolios. The platform makes it easy to leave comments on trades and updates, which encourages discussions among traders. Plus, we love that eToro tells you how many traders on the network are buying and selling any asset.

eToro’s social trading network also supports copy trading. You can easily discover expert traders who have proven their ability to profit consistently. If you’re good enough to be copied yourself, eToro’s Popular Investor program offers a chance to make money based on how many traders follow you.

Another great thing about eToro is that it offers an extremely wide range of assets. You can buy shares and engage in ETF trading either outright or through contracts for difference (CFDs). CFD trading is also available for forex, cryptocurrencies, commodities, and bonds. All trades come with 0% commission.

Pros:

  • Super user-friendly online stock broker
  • Buy stocks without paying any commission or share dealing charges
  • 800+ stocks listed on several international markets
  • Deposit funds with a debit/credit card, e-wallet, or UK bank account
  • Ability to copy the trades of other users

Cons:

  • Not suitable for advanced traders that like to perform technical analysis

75% of retail investor accounts lose money when trading CFDs

2. NAGA – Best Forex Social Trading Platform

If you want to dive into forex social trading, we recommend NAGA. This social broker offers trading on 48 different currency pairs, including a wide variety of exotics. It also supports commission-free stock trading and commodity trading through CFDs.

NAGA supports a fully functional social network as well as copy trading. The platform focuses somewhat on trading signals, updating your feed every time someone you follow has a signal triggered. There’s no charge for copy trading on NAGA, and the platform helps you start accumulating a following by providing a number of trading signals for free.

The platform also incentivizes traders to perform well and grow your network. For every trade you place, NAGA will pay you based on the number of traders who copy it. You can add photos and videos to your trade posts, too, which makes it easier to catch other traders’ attention.

Pros:

  • Supports trading signals
  • Get paid for copied trades
  • 48 forex pairs
  • Feed updates with trading signal triggers

Cons:

  • Does include market sentiment gauge

Your capital is at risk.

3. IG – Trusted UK Social Trading Broker Platform With Competitive Fees

IG doesn’t offer a full-fledged social trading platform with a news feed and the ability to follow other traders. However, you can buy and sell trading signals from other traders on the platform. These can be especially useful for day trading, since you can mix and match signals or modify them to suit your trading strategy.

IG offers several different ways to trade. You can buy shares and ETFs outright for long-term investing, or trade with CFDs or spread betting. CFD trading and spread betting are commission-free, while direct investing comes with a small per-trade commission. In addition, IG lets you take part in options trading and futures trading.

We also like IG because it gives you access to some of the most advanced trading platforms around. You can use the MetaTrader 4 forex trading platform, for example, which offers the ability to create custom indicators and backtest your trading strategy. You can also use ProRealTime, which boasts personalized dashboards and an incredibly powerful charting interface.

Pros:

  • Trusted UK broker with a long-standing reputation
  • Buy and sell trading signals
  • Access to over 10,000 stocks
  • Great research department

Cons:

  • A minimum deposit of £250
  • No social news feed

Your capital is at risk.

Social Trading UK Fees

Each social trading platform charges different fees, so it’s important to know which are the best value for money. To help, check out the table below.

Social Trading Broker Commission Deposit Fees Inactivity Fee Withdrawal Fee
eToro £0 if trading stocks & ETFs, spread for CFDs & crypto 0.5% conversion fee $10 per month after 1 year $5
Naga Spread + 10% commission on ETFs & 20% on stocks £0 £0 $10
IG £0-£10 if buying and selling stocks, spread for CFDs Free (0.5%-1% on credit cards) £12 per month after 2 years £0

 

Social Trading Pros & Cons

Pros:

  • Discuss strategies and learn from other traders
  • Stay on top of market news
  • Quickly gauge market sentiment
  • Automate your trades with copy trading
  • Develop a community of like-minded traders
  • Make money by accruing copy traders
  • More fun than traditional trading

Cons:

  • Easy to use other traders as a crutch
  • Other traders can be wrong or take bad positions

Learn How to Begin Social Trading on eToro

Ready to jump into social trading? We’ll walk you how to get started with eToro, which received our best social trading review of any platform in the UK. eToro offers a vibrant social trading app and commission-free trading on a wide range of assets.

Step 1: Open an eToro Account

To get started with eToro, head to the broker’s website and click ‘Join Now’ to open a new account. You’ll need to create a new username and password, then enter personal details like your name, email, and birthdate.

eToro also requires you to verify your identity, in compliance with government regulations. You can complete the verification step by uploading a copy of your passport or driver’s license and a copy of a recent utility bill or bank statement.

Step 2: Fund Your Account

Before you can dive into trading, you need to fund your account. eToro requires a minimum deposit of £140, which you can transfer by debit or credit card, e-wallet, or bank transfer.

Step 3: Explore the Social Network and Trade
Now you’re ready to start exploring eToro’s social trading network. Find other traders to follow to build your news feed, or head straight to an asset’s page to see how other traders feel about it. You’ll also find top assets to trade in the eToro market dashboard.

When you’ve found an asset to trade, click ‘Trade’ to open a new order form. Enter how much money you want to trade and whether you want to apply leverage to your trade. We also recommend setting a stop loss level to limit your risk. When you’re ready, click ‘Trade’ to place your first social trade on eToro.

Conclusion

Social trading in the UK is an excellent way to learn more about the markets and improve your trading strategy. With social trading, you get access to a whole community of traders, including professionals with a long history of profit. Whether you trade on your own using social data as a guide or take advantage of copy trading, social trading can help you become a better trader.

Ready to dive into social trading? Get started today with eToro!

eToro – Best Social Trading Platform in the UK

FAQs

What is the best social trading app?

Which social trading app is best for you depends on the features you need and the assets you want to trade. We recommend the eToro social trading app because it offers commission-free trading on a huge range of assets, a vibrant social network, and copy trading.

Does social trading improve my chance of making money?

Social trading won’t necessarily help you make more money from trading. That said, many traders find social trading to be very helpful since you have access to more data and you can use other traders’ ideas to improve your trading strategy.

Can you do social trading on MT4?

MetaTrader 4 offers a limited social trading platform. You can copy other traders using trading signals, but there is no news feed or market sentiment gauge.

How do I find other traders to follow?

The best way to find traders to follow is to use your social trading platform’s discover feature, if it has one. Otherwise, you can see what traders currently hold an asset you’re interested in trading in their portfolios.

Is copy trading free?

Most top social trading platforms don’t charge any extra fees for copy trading. However, if you are using trading signals, you may need to pay individual traders to purchase their signals.

Can I customize my news feed?

Your social trading news feed is personalized based on the traders you follow and the assets you frequently trade. Some platforms let you further customize your feed by following news topics or by hiding or amplifying specific traders you follow.

All trading carries risk. Views expressed are those of the writers only. Past performance is no guarantee of future results. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate. This website is free for you to use but we may receive commission from the companies we feature on this site.