Social trading is an alternative way to trade by allowing individuals to observe and follow the trading behavior of peers and experienced traders. In financial markets, social trading has been described as a low-cost, sophisticated alternative to traditional financial products. 

On social trading platforms (e.g. eToro, ZuluTrade, Naga Trader), individuals can join their peers' trading strategies and copy every single action the trader (or trading algorithm) enacts in real time. In return for providing trading signals to users, traders are compensated with fees.

Why Social Trading?

Reduce Emotion in Trading: Because you are delegating your decision to the trader you are following, it helps reduces the worry about the market’s day-to-day fluctuations. Users can determine if they want to continue using the strategy and simply withdraw anytime.

Verifiable Results: Social trading is inherently social. Individuals can observe performance and other statistics in real time.

Risks of Social Trading

Backtests and historical performance are not indicative of future results. In evaluating a strategy, users must be aware of the risk traders are taking to achieve that performance. Some strategies may only be effective in trending or flat markets. 

Set Social Trader

On Set Social Trading, anyone can create their own trading pools composed of the most popular cryptoassets (i.e. ETH, USDC, DAI, WBTC, Compound Tokens) and have followers join in. 

Learn more about Social Trading on TokenSets here.

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