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Copy trading Vs Social trading: Which is best for beginners?

If you are hoping to take your first steps in Forex trading, following expert strategies can be a great beginning point. Even if you’re wondering ‘how to make money on the Forex market without putting in much time and effort, Copy trading and social trading could be the best option for you. Social Trading and Copy Trading are investing strategies where investors observe or copy expert traders’ actions to gain profits as they trade.

Copy trading Vs Social trading: An overview​

Many novice Forex traders have difficulty finding reliable information on the Forex market, as well as being able to effectively and efficiently monitor their trades in a market that never sleeps. This is where copy trading and social trading become really handy. Although these methods have a lot in common, they are different from one another.

While copy trading is an easy way for novice and busy Forex traders to copy trades from seasoned professionals, social trading lets them observe and interact with expert investors as they apply their strategies. Collectively, both forms of trading can provide you with the means to profit from your trades without having to perform fundamental or technical analysis. We will explore the core differences between social trading and copy trading in this article.

What is Copy Trading?​

Copy trading is a popular method that allows newbie traders to identify successful traders and replicate their strategies to make a profit. With copy trade, you can learn from successful investors and traders, improve your trading capabilities, reduce time spent on research, and move beyond your inexperience. Copy trade will also be convenient for traders without enough time to follow the market on their own.

Copy trading can also assist Forex traders in establishing Investment Portfolio Diversification. This means that, instead of putting all of your capital into one position, currency pair, asset or strategy, copy trading will allow you to use multiple trading strategies to benefit each market because you can choose from a variety of traders to copy.

Copy trading can be done independently on your own or by using a specialized copy trading platform. Despite the fact that a trading strategy allows you to trade past the expertise with practically no skills or financial background, you still have to decide which investor to follow, as it involves risks. Consequently, some market monitoring and analysis may be necessary.
There are a few criteria to consider when choosing a Forex professional you’re willing to copy trade:
  • Check how long they’ve been into Forex trading.
  • Review their investment track record.
  • Look at their open positions.
  • See how long they typically hold investments.
  • Find out what type of investments they prefer.
Say you have chosen a Forex trader with a portfolio that consistently generates high returns. So, copying them should work for you. Read 6 Reasons why Copy Trade is a Perfect Start for Beginners to gain further insight.

What is Social Trading?​

Social Trading aims to provide Gen Z or any novice traders a means to learn and trade based on their interactions with experienced traders via social media.

It’s a mentality of Gen Z and millennials, where we are naturally used to sharing everything” — Chris Josephs


Social trading isn't just about having fun anymore, but it is also making wealth management accessible to young traders by helping them follow those whose bets are doing well. This is becoming a big trading trend as the new army of retail traders begins to realize "it's very, very hard to invest on your own."
With the rise of social networks over the last decade, more online communities have developed where like-minded traders and investors can share up-to-the-second market insights. The access to shared knowledge and experience provides additional confidence to investors because they can get real-time insights from some of the world’s most successful traders at their fingertips.

Unlike copy trading, this method does not provide automated trading. You will only be able to observe the strategies and decisions of other traders. If you use this strategy, you can observe:

  1. Discuss investment strategies with experienced investors.
  2. Track the performance of other traders.
  3. Receive signals and updates of their trading activity.
  4. Get in touch with potential Forex IB‘s (Introducing brokers).
Simply put, social trading is more of an educational opportunity where novice traders can learn from more experienced traders instead of copying them. Users communicate in chat rooms, forums, and other social media platforms. However, this approach comes with huge risks since you don’t know the legitimacy of the data.

Copy Trading Vs Social Trading: Which to choose?​

The decision to choose between copy trading or social trading is completely up to you and your trading preferences.

With social trading, you will be able to make trades based on information from other traders and you’ll be the one who decides whether or not to trade. Your portfolio and trading are much more controlled. This, however, comes at a price. Due to your inexperience, if you misread something, you may end up making the wrong move. Risks can be a bit higher with this, and you may lose a great deal in the beginning.

Copy trading, however, doesn’t require you to do anything except click the ‘copy trade’ button. You will then see all the trader’s actions (including currently open trades) in your account. You do not have to do anything other than that — the system is automated and will handle everything for you. On the downside, if you pick a trader that has a bad streak, your portfolio is at risk.

Copy trading is best for:​

  • Newbie traders who are interested in learning the fundamentals of Forex trading by copying other traders and earning money at the same time.
  • Traders and investors who have little to no time to trade are more appropriate for automated trading.
  • Professional and expert traders who earn commissions, rebates, or performance fees by allowing others to copy them. Payment structures vary by broker.
  • Traders prone to emotional trading, leading to poor trading decisions. Copy trading allows them to leave the management of their portfolios to a professional trader.

Social trading is best for:​

  • Newbie traders who are interested in learning the basics of trading without risking their money. It gives them the knowledge and confidence to follow other traders and learn from their insights.
  • Traders who trade as a hobby mainly for the purpose of engaging with other investors and traders. Profits are secondary. These traders will be satisfied with just a small profit.
  • Traders seeking to identify market trends and sentiment rather than focusing on technical analysis.
  • Professional and expert traders looking to build a following as a means of boosting their authority, credibility, and expertise, then using that following to earn money.
Identifying the type of Forex trader you are, along with your preferences, your goal and how much time you are willing to invest will help you choose between the two options.

Copy Trading has the upper hand!​

In light of the benefits of using computer-based algorithms, and the amount of time that is needed to trade forex manually, copy trading is a more sensible option.

Trading forex efficiently, and making a profitable ROI, take such a great amount of time, that most traders simply cannot afford it. This is why copy trading is, in our opinion, the best option. With it, you can skip the time and effort involved in studying charts, analyzing your next move, monitoring economic news, and can make a profit by manually copying other traders.

Original Article: Copy trading Vs Social trading: Which is best for beginners?

Disclaimer: This post is from Aximdaily and it is considered a marketing publication and does not constitute investment advice or research. Its content represents the general views of our editors and does not consider individual readers' personal circumstances, investment experience, or current financial situation.
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