The Difference between Copy Trading and Social Trading

Beginner investors keep looking for automated ways to execute trades or, what’s even better, follow professional traders and their strategies. Such popular methods as copy trading and social trading are becoming more and more popular. While the first one makes it possible to copy trades executed by pros, the second approach lets newbies only observe how experienced investors implement their strategies.

So, what is the core difference between copy trading and social trading? Which method works better for novice investors? What are the main pros and cons of both strategies?

Copy Trading Explained

With copy trading, one gets a chance to mimic professional investors and share profit on autopilot. All you need is to open an account and benefit from automated order execution following each and every step made by a signal provider or introducing a broker. If he or she buys, you buy. When he or she holds the position, you hold. Once a copied trader has made a profit, you also get a profit.

The strategy makes it possible for novice investors to trade beyond the expertise with actually zero skills or financial background. However, along with revenues, you also share risks. So, a bit of market monitoring and analysis will be useful.

Social Trading Explained

Unlike copy trading, this approach does not provide trading automation. You can only observe other traders’ strategies and decisions they take. With this tactic, you can only do the following:

1. Track stats of introducing brokers.
2. Get notifications when they make a move.
3. Discuss strategies experienced investors.

In other words, social trading is more of an educational approach when you can LEARN not COPY from other traders with more experience. People interact and communicate via chat rooms, forums, and other social platforms. However, this approach comes with huge risks as you never know how experienced a trader is.

Copy Trading vs Social Trading: Which One is Better?

Copy trading provides a more hands-off experience. Additionally, beginners can see the full picture with all traders’ stats and crucial metrics to decide either to follow a specific investor or not. What’s more, the approach delivers enough flexibility to customize the running strategy while social trading cannot ensure risk-free technique, as you cannot see the full traders’ picture.

Besides, it takes a lot of time to learn. This fact makes copy trading an ideal tool for those who seek maximum trading automation and hassle-free order execution with all risk-management instruments already integrated into the MTrading platform.

 

(Discliamer: Brand Desk Content)