Social trading features can be a valuable resource in your stock trading app and in this article, we will recommend a few apps for this. But what exactly is social trading?
What is Social Trading?
Social trading lets traders (often beginners) follow and replicate the trades of experienced traders within their stock trading app. Think of it as the “social media” of stock trading. Instead of making decisions on their own, traders can now watch the moves of experienced investors, and even mimic their strategies.
It allows beginners to learn trading without starting from scratch. They can observe how experienced traders react to different market changes and understand more about their decision-making processes. This can give insights that would have taken years for themselves to acquire.
Seasoned traders aren’t left out either. They can benefit from social trading by gaining followers, and sometimes even earn a commission based on the number of followers or the volume of replicated trades.
Why Social Trading is Gaining Popularity
- The Power of Community Insights: Two heads are often better than one, and a thousand heads are even better. Social trading platforms gather the knowledge and strategies of many traders, offering insights that no individual could ever achieve alone.
- Learning from Expert Traders: Ever wished you could peek over the shoulder of a stock market guru as they make their moves? Social trading allows you to do just that and learn from their successes (and mistakes).
- Reducing the Learning Curve for Newcomers: Stock trading can be daunting for newcomers. Charts, numbers, jargon—it’s a lot to take in. But with social trading, the entry barrier is significantly lowered. New traders can start by replicating expert moves, gradually understanding the logic behind them, and eventually making informed decisions on their own.
Top UK Stock Trading Apps with Social Trading Features
The best stock trading app in the UK for social trading is eToro.
Tips for Using Social Trading Features Effectively
Diving into social trading can be exhilarating, but to make the most of it, keep these tips in mind:
- Following the Right Experts: Not all that glitters is gold. Look for experts with both a consistent track record and transparent strategies. You need to do your due diligence as past performance is not a promise of future results.
- Balancing Between Following and Independent Analysis: While it’s tempting to replicate every move of your chosen expert, it’s crucial to do your own research too. Use the expert’s moves as a guide, but always understand the ‘why’ behind each trade.
- Avoiding Common Pitfalls: Remember to diversify your investments and avoid being overly reliant on one single expert. And always, always trade within your means. All investments come with risks.
To sum up
eToro is a great stock trading app when it comes to social trading and social trading is a great help for beginners to learn. But it doesn’t take the investment risks away, use it with caution.
Here you can see a list of the overall best stock trading apps in UK.