What is Social Trading?

Social trading is a modern way of investing based on socializing with others about trading online. Think of it as a social network, but with a financial focus.

This approach allows people, whether they're experienced or new to trading, to learn from one another. You get to see different viewpoints from a diverse community of traders. It's like having a group of friends who help you make better decisions in life.

What makes social trading particularly powerful is the opportunity it provides to tap into the collective wisdom of the community. Traders can draw from a rich tapestry of market perspectives, learning from each other's successes and setbacks. It's akin to having a global team of trading partners, each offering their unique insights and experiences.

Moreover, social trading isn't just about gathering information; it's also about forging connections. Traders build relationships within these communities, finding support and camaraderie along their trading journeys.

Additionally, some social trading platforms, like eToro, offer a feature known as copy trading, which takes it a step further as it allows to automatically replicate the trades of experienced traders.

However, it's worth noting that people often use the terms "social trading" and "copy trading" interchangeably, which it's not entirely correct. While social trading and copy trading are similar in that they both involve online communities and platforms for traders and investors, the key difference lies in the level of involvement and decision-making.

In social trading, participants interact, exchange ideas, and share insights within the community. Then, they make their own trading decisions based on the information they've gathered. Copy trading, on the other hand, is a more automated process. Investors select a trader or strategy to follow, and their accounts automatically replicate the chosen trader's actions.

One way or another, make sure to keep in mind that both social and copy trading are as risky as they can be successful. Of course, you'll be lucky if the cards fall right and the trader you decide to trust and follow is right. If not, however, you might end up copying faulty decisions.

eToro is a multi-asset platform that offers both investing in stocks and crypto assets, as well as trading CFDs.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Past performance is not an indication of future results. The presented trading history is less than 5 complete years and may not suffice as basis for investment decisions.

Copy Trading does not amount to investment advice. The value of your investments may go up or down. Your capital is at risk.

Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

eToro USA LLC does not offer CFDs and makes no representation, and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity-specific information about eToro.