Choosing the Best Social Broker for Forex
Trading in 2020
The concept of social trading is enticing. Access the secrets and strategies of high-performing traders. Setting up systems to automatically follow these high-performing traders is even an option in some cases, with traders being able to build passive incomes as long as the followed traders continue to outperform. Several of the best social brokers currently compete for the growing market of users interested in social trading services. We analyse the current brokers vying for this market and present the unique offerings presented by each. eToro rank in the first position among social brokers with their entire business model centred on social trading networks. However, several other broker choices are available with each offering their unique angle.
Australia is a rapidly growing market for forex brokers. Many forex brokers count Australia as their biggest market with the largest share of monthly visits coming from traders residing in Australia.
With a regulatory environment favourable towards such online brokerages setting up, several online brokerages have set Australia as their headquarters.
Other brokers that are headquartered overseas have been able to establish operations in Australia by complying with the regulations set forth by the Australian Securities and Investment Commission (ASIC). We review the most popular forex brokers in Australia and assess the upsides and downsides of each.
eToro Wins Best Social Broker of the Decade
Online brokerage eToro extremely popularized the social broker business. Originally founded in 2007, eToro has grown its market share in the online brokerage business by offering vast social trading functionality.
More than the other online forex brokers on our best social brokers list, eToro’s business model is closely intertwined with social trading. Self-marketed as the world’s leading social trading network, eToro has rapidly expanded its market reach since its founding in 2007.
Social trading is central to everything in eToro’s business model. All marketing campaigns leverage the strengths of eToro’s social trading platform. eToro traders can easily search for the best performing traders within eToro’s social trading network. eToro users have the option to allocate a portion of their funds to copying the performance of traders in the social network. Top-performing traders can also earn passive income from the community which follows them meaning there is benefits both for those following traders and being followed.
While following the best performing traders is known as eToro’s CopyTrader programme, the broker also offers the CopyPortfolio. CopyPortfolio is an investment vehicle which groups together several high-performing traders, or otherwise groups together financial products including CFDs, ETFs, and commodities.
eToro’s brokerage is regulated by the FCA, CySEC, and ASIC. The company is available to traders and investors in over 140 countries with the UK serving as eToro’s biggest market. eToro entered the United States market in May 2018, providing services to American customers in a market which is typically avoided due to tough regulations.
Pro's and Con's
79.3% of retail investor accounts lose money when trading CFDs with this provider.
Pepperstone Providing Social Trading Through Third Parties
Founded in Australia in 2010, online forex broker Pepperstone has also ventured into the social trading arena. However, Peppersone have taken a different approach to social trading by partnering with several third-party services to provide social trading to their trading customers. The third-party social trading services which Pepperstone have partnered with are the following:
- Myfxbook – Allows users to copy forex trading systems and create portfolios based on various strategies without needing to download any specific software.
- ZuluTrade – ZuluTrade also does not require users to download any specific software and enables users to copy trades of successful systems.
- Mirror Trader – Mirror Trader allow Pepperstone customers to tap into a library of algorithms designed to implement various trading strategies. Users can easily manage the library of algorithms by adding them, removing them, or setting certain parameters on each of the trading strategies.
- MetaTrader Signals – MetaTrader Signals allows Pepperstone traders to access thousands of trading strategies designed by MetaTrader users. MetaTrader Signals users can manage a variety of trading strategies and determine their maximum exposure to any given strategy.
- DupliTrade – DupliTrade is a trading strategy marketplace which provides Pepperstone traders with access to successful trading strategies designed by proprietary traders. DupliTrade integrates with MetaTrader 4 and requires a minimum deposit of AUD $5,000.
Pepperstone’s strategy to partner with third-party providers of social trading systems comes with its host of advantages and disadvantages. While users miss out on the vast social network of traders which they can access on forex brokers such as eToro, they do have more optionality when it comes to tailoring a specific social trading system.
Social Network for Trading Strategies via ZuluTrade on FXCM
Founded in 1999, online brokerage FXCM offers a choice of three trading platforms to their customers. MetaTrader 4 is a widely used and popular trading platform offered by FXCM. MetaTrader 4 offers versatile functionality to traders allowing them to tap into a wide variety of order types, technical analysis tools, expert advisors, and programming options. FXCM also offer their proprietary trading platform Trading Station. Trading Station is designed to allow FXCM traders to execute a variety of trading functions. Trading Station is available on both mobile and web making it a convenient trading platform for traders who want to access their portfolio while they are away from the desktop.