Social Trading Broker Test – the main criteria for choosing a platform
The Range of Products for a Social Trading Broker
Social trading is an exciting form of trading that has attracted the attention of many investors in recent years. It is interesting, not only for beginners, but also for experienced traders who are willing to share their knowledge. When looking for a social trading broker, it is important to check out how their range of products is structured. Social trading providers are now available for many different instruments, such as Forex, CFDs, stocks or cryptocurrencies. Some platforms even offer several instruments all in the same place.
BECOMING A SIGNALlER OR COPYING TRADES
When it comes to social trading, experienced traders can score points with their knowledge, helping beginners to make a good start on the market. When assessing brokers, the range of products available must be adequate for your trading needs. One of the criteria in a comparison is what kind of trading is offered and which underlying assets are available. Find out which assets are on offer and if, for example, cryptocurrencies are available – which attract interest due to their high volatility. ETFs or stocks can also be of interest for social trading.
THE TERMS – FEES AND INCOME OPPORTUNITIES IN SOCIAL TRADING
In a social trading broker comparison, fees come first when researching a platform – for both sides. If you want to follow and copy experienced traders, you must know what costs you will incur in copying trades. On the other hand, anyone providing their knowledge as a signaller receives a commission. As a signaller you should of course be able to assess what to expect in terms of trading costs and what profit you’ll receive for the provision of positions.
CHECKING TRADING FEES AND OTHER COSTS
The use of trading platforms is often free of charge, but some providers ask for a minimum deposit, meaning you will of course incur trading fees. In CFDs or Forex, brokers usually calculate the spread as they would for conventional trading. However, some brokers levy a margin or a percentage fee. Additional fees may be incurred on the platform for account management, inactivity or for deposits and withdrawals, for example. A comparison pays off – quite literally!
SOCIAL TRADING ACCOUNTS – TAKING A CLOSER LOOK AT VARIOUS MODELS
Originally, social trading was developed to help traders learn from each other and benefit from the knowledge of others. There are few strategies as effective as adopting the methods of successful traders. There are always at least two different account models with a social trading broker. One type of account is provided to the experienced trader who is willing to make their knowledge and trades available. Then there is an account type for traders who’d like to benefit from this knowledge. Some providers also offer other account types, for frequent traders, beginners or VIPs.
In a comparison, it is helpful to get an overview of the different account models to be able to estimate how useful they are for one’s own purposes. For example, traders who wish to be very active will benefit from a special account model with better conditions for frequent traders. Some brokers may even offer accounts for traders according to different levels of experience – this too can be very beneficial. Compare the costs and benefits, and decide carefully which type of account will meet your needs.
THE TRADING PLATFORM OF A SOCIAL TRADING BROKER
The trading platform of a social trading broker may differ slightly from the trading platforms of other brokers. It is obviously important for any trader to have an overview of their own trades, but with a social trading broker, you should also be able to see the following details on the platform:
- An overview of the trades of experienced traders
- A watch list with favourite traders
- An overview of the trades copied
- An overview of the success of the trades copied
Again, there is a distinction between professionals and beginners. Anyone who already has experience and wants to share their knowledge will have different demands on the trading platform than a beginner. In order to gain social trading experience, the platform should be highly intuitive for all types of traders. Traders should not have to search long to find answers. For example, it is an advantage if there are clearly defined pathways for all your trading activities, and of course it is also important to look at available trading tools and functions that you will need for trading.
A WELL-STRUCTURED WEBSITE
Behind many social trading brokers is a parent company, which may be based abroad. A broker who wants to assert themselves as the best social trading provider should make their website available in various languages. Of course, it is a benefit if one of these languages is your own, or one you understand well. In addition, the website should:
- Be clearly organised and well-structured
- Provide information that is relevant to the trader
- Give an overview of costs and fees
If traders have to click through the website for a prolonged period and still cannot find the information they are looking for, they are sure to lose interest quickly. Some information should be particularly quick and easy to find, such as customer support details, possible fees, and account opening and product range particulars. It is also helpful if there is a FAQ section and information about the company itself. All of this allows traders to perform research before signing up, decide whether the offer is appealing to them, and assess where the advantages and possible disadvantages lie.
CUSTOMER SERVICE TEST
The aim of social trading is to have traders that can act together and benefit from each other. However, questions for the broker may arise, so you may occasionally need to contact customer support. Many platforms now provide a chat function or forum where traders can interact. Looking at the trades carried out by experienced traders is often enough to get an initial idea of how trading works.
In order to establish themselves amongst the best social trading brokers, traders should have a contact person available whenever questions arise. Brokers may provide this in several different ways – support can often be accessed via live chat or by phone, for example. However, with a hotline you should look for a fixed service and the area code – telephone support can sometimes have fees attached. All brokers provide support via email or contact form.
DEPOSIT AND WITHDRAWALS ON THE SOCIAL TRADING PLATFORM
In order to start trading, funds must be deposited in the broker’s trading account. There are varying requirements regarding the minimum deposit, and there is usually a choice of deposit payment method, such as:
- Online payment services
- Credit card
- Bank transfers
There are some payment methods that have proven themselves over the years. This includes credit card, which is still one of the most popular payment methods on the Internet because it is easy to use and comparatively secure. There are, however, common alternatives – many traders now use online payment services. Payments via PayPal, Neteller and Skrill are particularly common. When evaluating a broker, you should make sure that the provider accepts your preferred method of payment.
For withdrawals, there are usually different options to choose from, but many providers will only transfer money out by the same method that it came in the first place. This should be checked in advance. Some brokers will also set limits for deposits and withdrawals, or charge fees for certain payment methods. You should also take this into consideration when comparing providers.
ADDITIONAL OFFERS – AN ADVANTAGE IN A SOCIAL TRADING
Any provider striving to become the best social trading broker should typically offer extra incentives. Many brokers, for example, may provide opportunities for training and further education. In this way, the broker can support traders, help them get started in trading or clarify questions. During the training, various strategies are usually demonstrated. Traders can try these strategies for themselves – though, of course, there is no guarantee of success.
THE SOCIAL TRADING DEMO ACCOUNT AS AN ADDITIONAL SPECIAL OFFER
If you are new to the social trading experience, a social trading demo account can help you get a feel for it without having to invest your own money. The aim of a demo account is to allow users to copy trades from experienced traders and watch the outcome, using virtual credit instead of your own money. Before you open a demo account, find out how long you can use it and whether it’s permanently available for free.
SECURITY IN SOCIAL TRADING: REGULATION AND RELATED ISSUES
It is important to ensure that a social trading broker is reputable and that they prioritise the security of client funds. Most platforms are similar in this regard.
Do you have to be afraid of social trading fraud? Although there are no guarantees, you can expect brokers to be regulated by government agencies – and this is an indication controls are in place and that any irregularities are investigated. In our reviews, and on individual broker websites, you can quickly see if, and by which authority, a broker is regulated.
DEPOSIT INSURANCE AND SECURITY THROUGH ENCRYPTED DATA TRANSFER
If you are concerned about social trading fraud, you can opt for deposit insurance. In addition, client assets should be segregated, and kept separate from each other. Client funds should also be protected, so that deposits are not lost in the case of broker insolvency.
Traders are required to contribute to security – although their own actions are limited to data security. Brokers typically transfer data using secure encryption, but it is up to you to ensure a secure Internet connection, a strong password, and to keep your data safe.
TRADE PRESS REVIEWS AND AWARDS AS POSSIBLE BEnchmarks
Trade press reviews are a very interesting element of a broker comparison. Various brokers are tested repeatedly and crucial information about security and supply issues are assessed. This is true for social trading, too. If you would like to know more about a broker, check for media coverage in the trade press.
Examples of awards given by websites or specialist magazines include accolades such as ‘Best Social Trading Broker’ or ‘Best Social Trading Platform’. Awards such as these are intended to showcase providers that excel in certain areas – perhaps in terms of trade range, customer support, or trading software. The winners in each category usually receive awards. The awards themselves are typically mentioned by the respective broker on their website.
A degree of caution should be taken with blogs or forums – they are certainly useful for a general overview, but the experiences noted on these channels are sometimes subjective and should not be a determining factor in your choice.
SOCIAL TRADING – MARKET OVERVIEW AND MARKET OUTLOOK
Social trading is possible in various areas but is particularly popular when trading Forex and CFDs. There are numerous social trading platforms available for stock trading, cryptocurrency trading or ETF trading, too, meaning that the market for social trading is broad and constantly evolving. There are many interested parties who are taking advantage of this to make themselves available as experts or signing up as followers so they can copy the strategies of more experienced traders.
SOCIAL TRADING REMAINS IMPORTANT
Social trading has numerous advantages and some disadvantages. The advantages are certainly interesting. By copying trades, newcomers will quickly understand how experts work and, at best, will make profits right from the start. In addition, they can learn to better understand trading, and are able to develop their own strategies. However, the danger is to rely too much on copying. In this case, the trader will not develop or will only develop to a very limited degree.
It is expected that social trading will become an area of increased importance in the marketplace and will continue to evolve. Among other aspects, this has been demonstrated by the comparatively recent trend in cryptocurrencies, which has been well received in the world of social trading.
THE SOCIAL TRADING BROKER TEST: COMPARE NOW & PROFIT FROM THE PLATFORMS
Based on our social trading reviews and the criteria listed here, you have the opportunity to gain an excellent overview, within a comparatively short time, of the platforms available and their advantages.
This is not only about the product range, but also about other issues such as support, additional offers, regulation and security. Social trading brokers vary greatly in terms of supply, so a broker comparison can be truly revealing. Similar to a CFD broker comparison or a Forex broker review, it is primarily about finding the provider that suits you, your budget and your trading goals. We therefore recommend that you use the points explained above to form an impression of the providers. Start comparing today, try a free demo account if possible, and find the best social trading platform for you!