Social Trading Vs. Copy Trading

What is a Social Trading Platform?

Social trading platforms function as both social networks for traders and brokers, offering the opportunity to trade in a variety of assets, including CFDs, ETFs, and cryptocurrencies. These platforms distinguish themselves from traditional trading platforms by fostering connections among traders. They enable users to emulate the trades of others, engage in discussions, share insights, and accelerate their learning process. In the context of cryptocurrency, these platforms facilitate trading in crypto assets and contracts. Social trading exemplifies the impact of web 2.0, leveraging user-generated content to benefit niche markets like finance. By linking experienced traders with novices, beginners can learn to make sophisticated market decisions without extensive knowledge. The essence of social trading lies in collaborative learning and communication, often exemplified by influential online traders sharing their insights, sometimes for a fee. While blindly following social media personalities isn't always wise, this method offers a viable route to financial literacy, especially for those new to crypto and finance.

PhemexPulse (An example of social trading)

In March 2024, Phemex, a top-tier crypto exchange, introduced PhemexPulse, a platform designed for users to join influencer-led groups. This initiative promotes vibrant conversations and grants access to specialized trading insights. To stimulate participation, Phemex incentivizes the most engaged groups with weekly Phemex Token rewards. Offering a unique opportunity to earn without the necessity of trading, PhemexPulse stands out as a vital resource for keeping up with cryptocurrency investment trends in 2024.

What is a Copy Trading Platform?

Copy trading in the cryptocurrency realm is an automated approach that replicates the trading strategies of seasoned traders. It allows individuals to engage in crypto trading and potentially profit without extensive research or expertise. The core of cryptocurrency copy trading is to identify skilled traders and mirror their trades exactly. Users benefit from the experience of experts without dedicating time to market analysis or complex trading strategies. For example, if the trader being copied invests in a particular cryptocurrency, the copy trading software does the same. This tool not only aids beginners in leveraging expert knowledge but also assists in developing their investment acumen. An alternative is joining trading groups on platforms like Facebook or Robinhood, where one can receive trading advice, though this involves more risk due to the inherent volatility of the crypto market. 

How does Crypto Copy Trading Work?

Copy trading in the cryptocurrency domain involves a few straightforward steps:

Selecting a Copy Trading Platform: Opt for a trustworthy copy trading platform that matches your investment objectives in crypto. Search for platforms offering a wide range of experienced traders along with detailed information about their trading history and methods.

Connecting Your Account: After registration, link your trading account to the chosen platform. This connection enables the platform to automatically replicate the trades of your selected traders.

Exploring and Selecting Traders: Review the list of traders on the platform, assessing their trade history, performance, and risk approach. Choose traders whose strategies are in line with your risk tolerance and investment goals.

Allocating Funds: Decide how much capital you want to dedicate to copy trading. This amount will proportionally mirror the trades of your selected traders, based on their investment strategies.

Automatic Replication: Once your account is connected and funds are allocated, the platform will automatically duplicate the trades of your chosen traders in real time. Your account will reflect their trading moves proportionately.

How does Phemex’s Social Trading (PhemexPulse) Work?

To participate in Phemex's social trading through PhemexPulse, you can follow these simple steps:

Access “PhemexPulse”: After logging into the app, locate and tap on the “PhemexPulse” icon.

Choose a Group: Upon selection, each group displays information such as the influencer’s name, the number of participants, and weekly rewards. You can then select your preferred group.

Join for Free: After deciding on a group, you'll be directed to a page where you need to click “Free to Join” to become a member. This page also shows all members along with their accumulated points and PT Rewards. Now you’ll be able to win PT rewards every week just by interacting in your group and discussing the market with like-minded members.

Social Trading Vs. Copy Trading

Copy trading is best for

• New investors or traders seeking to understand crypto trading basics while earning by mirroring other traders' actions.
• Individuals with limited time for trading, making automated trading a practical alternative.
• Skilled and experienced traders who wish to monetize their expertise by allowing others to copy their trades, earning through commissions, rebates, or performance-based fees, as set by the broker.
• Traders prone to emotional decision-making, resulting in suboptimal trades. Copy trading offers them the advantage of entrusting their portfolio management to a professional trader.

Social trading is best for

• Novice investors or traders looking to grasp trading fundamentals without risking their funds, benefiting from the knowledge and insights shared by experienced traders.
• Hobbyist traders who are interested in community engagement with other traders and investors.
• Traders focused on gauging market sentiments and trends rather than delving into complex technical analysis.
• Expert and professional traders aiming to expand their influence and credibility by growing their follower base, subsequently monetizing their authority and expertise in trading.

Best Crypto Copy Trading Platforms in 2024

Phemex

Phemex is a prominent crypto and derivatives exchange known for its advanced copy trading features. It offers a comprehensive social trading environment, allowing users to follow and copy the trades of successful traders.

Pros:

• Customizable copy order criteria
• Detailed performance metrics for traders
• Intuitive user interface
• Trading bots available for various cryptocurrency pairs

Cons:

• Withdrawal fees may apply
• Mandatory minimum withdrawal amount

ByBit

Bybit is a renowned crypto exchange that integrates a unique copy trading feature, offering a blend of traditional trading and social interaction. It allows users to either become a trader that others can copy or an investor who copies the strategies of others.

Pros:

• Wide selection of traders for copying
• User-friendly interface
• Up to 100x leverage available
• Customizable preferences and fund allocation options
• Sign-up bonuses frequently available
• Autopilot mode for convenience
• Online customer support

Cons:

• Not available for US residents
• Fees can accumulate over time
• Limited to one exchange

Binance

Binance, a global leader in the cryptocurrency exchange sector, provides a copy trading service enabling users to mimic the trades of experienced traders, thereby catering to both beginners and seasoned market participants.

Pros:

• Leading crypto exchange with high liquidity
• Global presence

Cons:

• Some products may be regionally restricted
• Copy trader profiles may not be internally vetted
• Higher fees for smaller traders

ZuluTrade

ZuluTrade, established in 2007, is a distinguished cross-broker social trading platform. It connects over 50 brokers globally and allows users to select from a vast pool of signal providers for copy trading.

Pros:

• Large selection of signal providers
• Wide range of brokers available
• High level of transparency

Cons:

• Limited number of cryptocurrencies supported
• Steep learning curve for new users
• Presence of many amateur traders

PrimeXBT

PrimeXBT combines the functionalities of a social trading platform and a crypto exchange. It offers margin trading and copy trading services, allowing users to learn from and follow the strategies of expert traders.

Pros:

• Demo account available for practice
• Low trading fees
• High potential for profit sharing for traders
• Expanding range of tradeable assets

Cons:

• Not beginner-friendly
• Geographical restrictions may apply

eToro

eToro is a pioneering and highly popular social trading platform, particularly favored by beginners. It provides a user-friendly environment for copy trading in cryptocurrency markets and is regulated by the FCA.

Pros:

• Traders have blogs for interaction
• User-friendly interface suitable for beginners
• Regulated by the FCA

Cons:

• Inactivity fees
• Higher withdrawal fees than some competitors
• Traders may not be vetted internally

BingX

BingX is a new entrant in the cryptocurrency exchange landscape, offering a straightforward and adaptable copy trading feature. It emphasizes building a community where traders can share ideas and strategies.

Pros:

• Active social trading community
• Easy-to-use interface
• Demo accounts for practice

Cons:

• Higher transaction fees
• Not available for US residents

Wundertrading

Wundertrading focuses on establishing a social trading platform that nurtures a community of traders. It encourages collaboration and provides access to various educational resources and tools.

Pros:

• Strong focus on building a social trading community
• Opportunities for collaboration and learning
• Access to educational resources and tools
• Regular promotions, including first month free
• Supports multiple popular crypto exchanges

Cons:

• Growing but still relatively small user base
• Includes less skilled traders among the community

Best Crypto Social Trading Platforms in 2024

Phemex

Phemex stands out in the crypto and derivatives exchange market, particularly known for its advanced copy and social trading features. It offers a social trading space where users can emulate the trading strategies of experienced traders, tailored to their risk preferences.

Pros:

• PhemexPulse social traders offers users a pool of 50 million PT to be distributed to the most engaged group members every week
• Adjustable criteria for copy orders
• In-depth trader performance metrics
• User-friendly interface
• A range of trading bots for various cryptocurrency pairs

OKX (formerly OKEx)

OKX, formerly OKEx, features OKX copy trading, allowing users to mirror the trades of skilled traders. This feature is particularly beneficial for those who prefer not to engage in extensive personal trading research. OKX supports an extensive array of coins and trading pairs.

Pros:

• Competitive fees
• Beginner-friendly interface
• Low deposit and conversion charges
• Ability to filter traders by Assets Under Management (AUM) capacity

Cons:

• Not accessible to US residents
• Increasing Know Your Customer (KYC) procedures globally

Wundertrading

Wundertrading focuses on creating a social trading platform that is community-oriented. It encourages collaboration among traders and provides access to educational resources, facilitating a space for users to follow accomplished traders and engage in automated trading.

Pros:

• Emphasis on developing a social trading community
• Collaborative and educational opportunities
• Access to various educational resources and tools
• Promotions for a free first month
• Supports multiple cryptocurrency exchanges

Cons:

• Relatively small, yet expanding user base
• Inclusion of some less skilled traders

General Considerations for Social and Copy Trading:

Social and Copy Trading offer valuable opportunities for investors at all levels. These platforms are ideal for those looking to connect with fellow traders, discuss strategies, gain investment insights, or prefer a more hands-off approach to trading. When selecting a platform, important considerations include local availability, support for desired trading assets, fee structures, security measures, user base size, and minimum deposit requirements. With the diverse range of platforms available, there's likely a suitable option for every investor's needs.