As already mentioned, Social trading is a form of online trading that combines elements of social networking and financial trading.

It allows individual traders and investors to connect, interact, and share their trading strategies, insights, and trades with others on a dedicated platform or through social media channels.

This adds a degree of community to an otherwise isolated trading experience. 

Social Networking

Social trading comes with a host of social network features, such as individual profiles, like and follow functions, chats, posts, etc. 

Traders can also filter through influencer traders based on their follower count to get some interesting new trade ideas from them. 

This social aspect facilitates the exchange of ideas and knowledge among traders. 

Copy Trading

One of the central features of social trading is copy trading, also known as mirror trading or auto-trading.

In copy trading, less experienced traders can automatically replicate the trades of more experienced and successful traders.

This allows novices to benefit from the expertise of others without having to make independent trading decisions. 

Copy trading is an essential tool of all social trading platforms and allows traders to build up a following of other market participants with similar interests. 

Information Sharing

Traders on social trading platforms share their strategies, market analyses, and insights with the community. 

This information can be in the form of posts, charts, or real-time updates. This transparency helps traders learn from each other and make informed decisions.

Traders with similar interests can band together to devise new strategies and come up with complex new ideas and solutions. 

Community Engagement

Social trading communities often provide forums, chat rooms, and discussion groups where traders can discuss market trends, trading strategies, and other relevant topics.

These discussions give traders a sense of community and increase engagement on the platform. 

Performance Metrics

Most social trading platforms provide performance metrics and statistics for each trader.

These metrics include historical trading results, risk levels, and other relevant data.

Prospective followers can use this information to assess the track record of traders they are considering to follow.

Risk Management

While social trading can be a powerful tool for learning and potentially profiting from the financial markets, it also carries risks. Copy trading does not guarantee returns and traders need to be aware of its limitations.

A good example of social trading is the Public.com platform, which combines the features of a brokerage platform with those of a social network.

Users can share their portfolios and gain insight from millions of other market participants. 

Public offers over 9,000 equities, as well as cryptocurrencies and treasury securities to their clientbase. 

While social trading may be a more engaging approach to trading, it nonetheless comes with its fair share of advantages and disadvantages. 

Traders need to consider these factors to make sure that social trading is beneficial to them and that they will use the additional features that come with social trading platforms. 

Pros

• Access to expertise - social trading provides an opportunity for individuals without extensive financial knowledge to potentially profit from the expertise of others
• Diversification - Social trading enables traders to diversify their portfolios by following multiple traders with different trading styles and strategies. This diversification can help spread risk
• Community and learning - Social trading platforms foster a sense of community and collaboration among traders. This can be valuable for learning and staying updated on market trends

Cons

• Risk of loss - Overreliance on others' strategies can lead to financial losses if the traders being followed make poor decisions
• Limited control - When copying other traders, you surrender some control over your trading decisions. This lack of control can be a disadvantage if the trader you follow makes sudden or unexpected moves
• Quality variability - The quality of traders and their strategies can vary widely, making it essential to carefully research and select the traders to follow

• Social trading is an approach to trading that uses the features of social networks and traditional brokerages
• Social trading has been a product of the democratization of finance trend on global markets, making markets more accessible across the board
• Traders can connect with each other, exchange ideas, follow and share portfolios
• The additional features of social platforms give traders a sense of agency and community