| Updated: September 15, 2025How does social trading work?
This lesson will cover the following
- Similarities between social trading and social networks
- How to follow a trader
- Private messaging and information access
We’ve already explained what social trading is, so you probably have a basic understanding of how it works. If you have not yet read the introductory section on social trading, we recommend that you do, because from this point onwards we will assume you know what we are talking about.
Similarities between social trading and social networks
Social trading gives you the unique opportunity to obtain information about the market from other interested parties. You can trade in collaboration with them or simply use the data provided for your own trades – that’s entirely up to you. Social trading works on the basis of social networking. Just as Facebook is a platform that connects you, your family and your friends at all times, social trading networks provide a nurturing environment where novice and veteran traders can exchange data, strategies, methods and ideas.
Differences between social trading and social networks
The main difference is that social trading platforms focus on trading rather than the social aspect of a person’s online and offline activity. As with Facebook, plenty of information about you is contained in your profile. However, unlike Facebook, the information does not focus on you as an individual, but on you as a trader. On most platforms you can easily review an investor’s portfolio to see whether they are successful, how much they’ve made in the past and what their niche is. Social trading relies on the constant, free flow of information across the network. Just as your Facebook feed lets you see what your friends have been up to, trading sites’ feeds show you what other traders are doing and how they are investing. They often share vital information and help you make informed decisions. Similar to Facebook, not everything is true – sometimes people misinterpret data and sometimes they simply lie for their own gain. That’s why it’s critical to check a trader’s profile before you decide to follow their advice.
Following a trader
If you like what a trader is saying and think he’s often right, you can choose to follow him (this function is very popular on eToro). This way you can see his moves, comments and more at all times. The process helps you learn from this person because you can observe what he is doing and ask why if you don’t understand the reasoning. We strongly advise you always to follow traders who communicate with the community. By doing so you can learn far faster than you normally would. Of course, if the community is huge they might not always be able to answer your questions, but there is a difference between those who at least try to be helpful and those who share information and then fail to follow up.
Private messaging
Private messages are one of the best ways to learn about something you’re interested in. Social trading platforms give you access to millions of other users whom you can ask about anything. If you like a trader and follow their trades but they make a move you find confusing, you can easily ask why they did so. You can also try to predict the results of their actions by reading the same tables they do. In this way you can track your progress and see how good your judgement is compared with experienced traders.
Information access
Social trading provides a rich environment in which you can thrive. The platforms give you access to tonnes of important, synthesised information that you would otherwise need a great deal of experience and knowledge to acquire. Through the perpetual data stream, social trading allows you to enter trades and make financial decisions without necessarily possessing the expertise required to make the right moves. Social trading is the ultimate weapon for the new trader.
Help your fellow traders
If you’re an experienced trader, you might want to help others and give back to the community. You can easily do so via social trading platforms, where you can be sure that the information you provide will be read by people who will use and appreciate it.
Final words
Social trading is very similar to the social networking you know and love, but it’s much more functional and the information it provides is far more deliberate. It’s unlikely that you will see something unrelated to trading on a trading platform. That being said, social trading is not stiff or boring. It’s a lively and positive environment you can easily become part of. Whether you want to share your experience with other people or learn how to trade, there is a place for everyone.
At the end of the day, social trading is based on the inherent human instinct to collaborate. It allows you to work with, be helped by and assist others. Ultimately, however, the decisions you make are your own. Social trading gives you the opportunity to act; how you do so is up to you.