Best Forex Social Trading Platforms USA

Which is the best forex broker for social trading?

eToro is the best forex broker for social trading, there’s no doubt about it. With a community of over 25 million users, eToro has built a reputation as the world’s leading social trading broker.

With a user-friendly proprietary platform that is specifically designed for social trading, you can trade over 3000 CFDs with ease. From our perspective, the best aspect of eToro’s platform is the ability to easily switch from self-directed trading to copy trading. However eToro does not have Forex trading so for this reason we suggest OANDA.

As a U.S. trader, we recommend OANDA as the best NFA/CFTC-regulated broker for social trading (eToro is not regulated in the U.S.). You can social trade using OANDA’s MT4 platform through a list of signal providers or social networks using TradingView.

We like the reliable nature of OANDA’s MT4 platform offering, which has a premium upgrade should you wish to access more advanced trading tools.

What is Social Trading in Forex?

Social trading in Forex is the method of buying and selling foreign exchange currency pairs based on the strategies of other, often more experienced, traders. While more commonly used by beginner traders, any level of trader can employ social trading as part of their trading strategy.

Similar to copy trading, social trading is a form of Automated Forex Software or algorithmic trading, in which you automatically copy the positions of another trader.

A good way of thinking of social trading is as a peer-to-peer social network of traders, where you exchange ideas, interact with others and educate yourself on financial markets.

How does Social Trading Work in the US?

Social trading works in the US just like anywhere else in the world, by connecting with other users/traders around the world through a social trading platform offered by a US-regulated broker.

Delving deeper, social trading involves making one’s investment decisions and trade performance transparent so that anyone can replicate other users’ portfolios and trading activity automatically.

There are two main ways you can social trade: by completely copying another person’s strategies and trading plan or by just copying certain aspects of it.

For example, if the provider you’re copying opened a position on EUR/USD worth $100,000, you could do exactly the same, or you might choose a smaller position size of $10,000, depending on your risk tolerance.

Pros and Cons of Social Trading

There are many pros but equally many cons of social trading that you should consider before starting. We have highlighted the major pros and cons of social trading below:

How to choose a forex broker for social trading in the US?

Choosing the right forex broker for social trading in the US involves considering several key trading factors, which we have listed below:

1. Spreads

   Many brokers increase the mark-ups on spreads for social trading assets to compensate signal providers. Performance fees may also apply, depending on the social trading platform. Outside of spreads, there are also indirect costs like withdrawal fees and currency conversion charges, to take into consideration.

2. Funding and Minimum Deposit

   The funding methods and minimum deposit requirements are an important factor to consider. Ideally, a good forex broker that offers social trading should provide a wide range of funding methods and a low minimum deposit requirement.

   We recommend choosing a signal provider that has a similar portfolio size in terms of funding so you are not social trading with more than you can afford.

3. Number of Signal Providers

   Choosing a forex broker that offers a large number of signal providers to copy keeps your options open so you can choose the best provider that aligns with your trading goals.

4. Execution Speed

   Choosing a social trading platform that features fast execution speeds is important in the fast-moving world of financial markets. This is especially true for scalpers and high-frequency traders.

5. Assets To Trade

   Having a social trading platform that offers a wide array of assets will help you diversify your portfolio as it grows. That way you can take advantage of more opportunities within each asset class, and keep your risk profile at acceptable levels.

6. Leverage

   Leverage is an excellent tool to amplify your profit potential as a social trader if used in conjunction with risk management. A low margin requirement then grants you more flexibility to enter the market at a low cost-barrier.

7. Trading Platform vs 3rd party tools

   A professional-grade Trading Platforms that is reliable, easy to use and has plenty of 3rd party tools supports all types of traders and offers vast configuration options to suit whatever style of social trader you are.

Social Trading vs. Copy Trading: What are the Differences?

The difference between social and copy trading is small yet distinct and can be summarised in three main factors:

Social Interaction: Social trading is about interacting with others and their trading ideas and deciding whether you should follow, while copy trading is something that is done automatically and without any social interaction.

Decision-making: In social trading, you can analyze and make your own trading decisions based on the information shared by other traders while copy trading involves simply selecting a successful trader to follow, with all the trades automatically replicated in your trading account.

Knowledge and Learning: Social trading provides you with the opportunity to learn and gain knowledge about different trading strategies, market analysis, and trading techniques while copy trading simply requires you to mirror the trades of successful providers, without any pre-existing knowledge of trading or financial markets.

An Example of Social Trading vs Copy Trading

Social Trading Example: After discussion with many different traders on your chosen social trading platform, you decide to trade the EUR/USD, based on your findings from studying the charts.

Copy Trading Example: After scrolling through the list of signal providers on the MT4 platform, you decide to trade the EUR/USD simply by having a quick glance at the provider’s performance statistics.

What are the risks of social trading?

While social trading platforms present intriguing potential, it’s critical to be aware of the risks and difficulties involved. It’s important to be aware that past performances do not guarantee future results, and that following others’ trades blindly may not always be profitable.

For long-term success, it is essential to conduct in-depth research, comprehend the dangers, and create a unique trading plan.

Lack of Personal Responsibility
One of the fundamental downsides of social trading is the lack of personal responsibility. Blindly copying the trades of others without thoroughly understanding the underlying strategies, risks, and market dynamics can lead to substantial losses.

False Sense of Security
Given that social trading platforms showcase the performance of successful traders, this can create a false sense of security among beginner traders, who may believe that simply copying these traders will guarantee similar results.

Herd Mentality
The social aspect of social trading can give rise to a herd mentality, where traders tend to follow the crowd without critically evaluating market conditions.

Lack of Transparency
While social trading platforms offer access to vast amounts of data and the trading history of other traders, some providers may hide losses or only display their successful trades, giving an incomplete picture of their overall performance. This lack of transparency can mislead you into making uninformed decisions.

Which is the broker with the lowest spreads that offer social trading?

In terms of social trading, OANDA is the broker with the Lowest Spread Forex Brokers of 0.6 pips for EUR/USD, which is the lowest of any U.S.-regulated broker we’ve tested. These spreads are available during Forex Trading Hours which is from 24/7 Moday to Friday.

Are there fees for using social trading?

Yes, there are generally fees associated with social trading, the main ones of which we have highlighted below:

Performance Fee: Sometimes performance fees are charged on profits made by the signal provider. As an example, if the provider made you a profit of $1000 and charged a 10% performance fee, you’d pay $100, leaving you with $900.
Management Fee: Although less common, some social trading platforms charge management fees. This is usually charged on your invested amount regardless of performance. E.G. a management fee of 5% on $1000 would mean you pay a $50 fee.
Trading Fees: Trading fees include spreads and commissions. Commissions are pre-defined by the signal provider whereas spreads are the difference between the bid and ask price of the copied trade.

All of the above fees will eat into your potential profits, so you must understand what you’ll need to pay before proceeding when social trading.

Is Social Trading Good For Beginners?

Generally, social trading is considered good for beginners as it allows novice traders to access portfolio infographics of more experienced traders without having to spend years learning and advancing their financial trading skillsets.

It is also useful to have a social trading network to communicate and share investment ideas with as a beginner to help you become more comfortable with trading the financial markets.

However, beginners need to be aware of extra fees associated with social trading as well as the notion that copying an experienced provider’s trades doesn’t guarantee that you will be successful.

How Do I Start Social Trading?

To get started in social trading, we have laid up a step-by-step guide below:

1. Choose a social trading platform: There are many available, including popular platforms like MT4 and ZuluTrade, so make sure to do your research. You might want to consider things like fees, features, and customer service.
2. Choose a Broker and Create an Account: Once you’ve chosen a platform, you need to create an account with your chosen broker. This involves providing personal information, including your email address, phone number, and bank details.
3. Fund Your Account: To begin trading, you’ll need to deposit funds into your account. Common ways you can fund your account include bank transfer, credit/debit card, online methods like PayPal or e-Wallets like Skrill.
4. Find a Strategy: You can find the perfect strategy for you by communicating with the social trading community available on your chosen platform. Then, you simply need to go over the signal providers and find a strategy you like.
5. Start Trading and Monitor: Based on your findings, you can start social trading with the signal provider whose strategy you like. Then, we advise that you monitor this trade to ensure it performs as you expect.