What is Copy Trading and How Does It Differ from Social Trading?

Copy trading and social trading are two emerging investment techniques that entail mimicking or following other traders. Although they are relatively similar, the difference lies in how the traders engage. We can state that copy trading is a subset of social trading, a more general concept. In this article, we’ll learn the details of these two approaches and their main differences.

What is Copy Trading?

Copy trading comes under the heading of social trading. It follows the same strategy of copying other traders’ trading strategies but in a more automatic way. The copy trading method allows less experienced traders to directly mimic the trading tactics of a more experienced trader. 

All you have to do is to make an account and link it to a professional trader with good trading history. By linking, you’ll follow their steps and earn the same profit as they do. 

What is Social Trading?

Social trading is a revolutionary approach that involves online trading and novice traders following the investment strategies of experienced investors. Social trading allows investors to learn other traders’traders’ ideas and strategies and interact with others via chat rooms. 

By following their techniques and copying them to execute trades, investors can earn good profits without doing any fundamental analysis. In a nutshell, you rely on the investment technique of other investors to make your financial selections.

Copy Trading Vs Social Trading: Differences

Now we know that copy trading and social trading are two related but distinct investment approaches following the strategy of copy trades of a successful trader. Let’s learn in more detail about the differences they hold.

Trading Strategy

With social trading, individuals can make trades using other successful traders’ strategies. The decision-making is in the investors’ hands. You have considerably more control over your trade and portfolio. In contrast, copy trading only requires clicking the “copy trade” button. 

The system is automated and will take care of everything for you. You don’t get any say in any decision made by the signal provider, making it a less controllable option. Simply said, social trading is a more flexible than copy trading, offering the chance for individual decision-making.

Community Involvement

The primary focus of copy trading is to mimic the trades made by the chosen trader. Copy trading focuses on a one-way interaction where participants seek to gain financially by imitating the trading strategies of seasoned traders. 

Whereas Social trading encourages a two-way exchange of expertise where participants not only imitate each other’s trades but actively participate in conversations, share their views, and jointly develop better trading techniques.

Learning Curve

Copy trading provides the opportunity of learning by observing the tactics of a skilled trader. However, it focuses more on mimicking rather than collaborative learning. On the other hand, social trading provides an enriching setting for education and information exchange. 

Traders may debate market movements, share ideas, and work together to strengthen their trading abilities. It involves creating a community of learners, not just copying.

Copy trading Vs Social Trading: Which is Better?

The choice between copy trading and social trading is not a matter of one being inherently superior to the other; rather, it depends on your own trading objectives, interests, risk tolerance and level of engagement in the trading process.

If you want more control over your portfolio, social trading can be a perfect choice for you since it allows you to learn the tactics of experienced traders. Ultimately, it’s your decision which tactic you want to follow. However, if you’re less eager to learn or don’t have time to analyze everything before executing a trade, then you may opt for copy trading. 

By choosing this method, you can chill, knowing that the skills of seasoned traders will influence your gains. Even better, you may blend components from both to design a plan that suits your tastes.

Maximize your trading potential with insights on copy and social trading. Elevate your portfolio by leveraging the expertise of seasoned traders on Crypto Trade Mastermind.