Investing in assets based on the strategies of experienced traders is a popular way of trading in markets such as cryptocurrency, Forex, and stocks. This type of trading is known as copy trading and social trading. The two methods share similarities but have distinct mechanisms when it comes to how traders interact with each other.
What is Social Trading?
Social trading in financial markets involves copying trades from other traders via a social network. It provides users with a support system and opportunities to get ideas, discuss strategies, and communicate through forums, profiles, blogs, signaling services, and brokers. It is advantageous for both beginner copiers and expert traders as it allows them to follow the experienced ones and become trading leaders, respectively.
What is Copy Trading?
Copy trading is a kind of tool used by traders to copy orders of professional traders, allowing users to create their own trading strategy and increase profits. Users can choose whether they want to open the same position or have automated systems perform the action on their behalf. This is an easy way for beginners to make regular profits in the market without investing a lot of time and effort.
What is The Difference Between Social Trading and Copy Trading?
Copy trading and social trading are often confused, but there are some differences. Social trading involves group management of investments, with traders sharing research and advice. It has been popularized by social media and does not require any special software or profit-sharing agreements. Copy trading, on the other hand, uses specialized software to copy money managers’ trades and often involves a profit-sharing agreement.