Social Trading In Forex vs. Crypto: Learn the Major Differences and Similarities

Beginner’s Guide / 24.05.2020

For newer traders, and even those with more experience but less confidence, social trading in both crypto and forex markets offer an excellent avenue for learning and earning returns. 

This system lets users access the same functions – charts, indicators, and buy/sell tools – but adds a human layer, letting users share their knowledge and strategies with others while informing their own decisions.

As such, social trading makes an excellent way to earn an investment income by copying the trades of a range of experienced, profitable traders on a social trading network.

In this guide, we compare and contrast Forex and Crypto social trading to unveil how they can benefit your investment endeavors, as well as examine top platforms offering quality social trading systems. 

Social Trading is Easier in Crypto Markets

Copy/social trading utilizes a system that uses technology to replicate other traders’ trades or signals. It utilizes the concept of automated trading in Forex. 

But the difference, in crypto markets, is that instead of picking trades based on the signals generated by a sophisticated algorithm, you automatically pick trades based on experts’ strategies on the platform.

In both cryptocurrencies and forex trading, there are so many external tools that can help traders make more profits as they advance their art. 

There are probably more tools, including advanced tools, for those who want to start trading Forex than those willing to start trading crypto. However, it is harder for individuals to recognize, analyze, and capitalize on trends in the greater stock and Forex market. 

This is not so with crypto, where prices can increase and decrease in a much more tied version and related to each other. Thus, in cryptocurrencies, experienced traders can effectively predict the market’s movements, but with stocks and Forex, it may be difficult to predict the larger issues that move markets. 

In other words, there is a higher level of complexity to the Forex market and thus more to learn, which complicates attempts to utilize social trading in such markets. 

The downside of trying to emulate other traders’ strategies in a complex Forex market with vast assets on offer is that there is a higher chance of applying inappropriate leverages that could increase the possibility of high losses. 

It is easier for a beginner to learn cryptocurrency trading from scratch before they can get started. Paper trading features have been introduced to major crypto exchanges for those trying to learn, which can be used in conjunction with social trading strategies such as copy and mirror trading. 

Crypto Offers More Trading Pairs

In both Crypto and Forex markets, one would require a strong desire to learn through observing and copying successful trading strategies continuously.

That said, there are now more than 5,392 cryptocurrencies and altcoins in the crypto markets, which presents one advantage for crypto traders; they have the option of choosing from a wide diversity of digital tokens for which to trade against each other. So if it’s a bad day for BTC, one could easily check if there is relief in ETH or some other low cap coin. 

Having a range of trading pairs in crypto ensures there are more successful trades one can observe and mirror by applying social trading, ultimately boosting one’s ability to build a workable and beneficial crypto portfolio.

Volatility and Stability

Crypto trading has better volatility than Forex Trading, making it easier for crypto traders to take advantage of the small differences in exchanges. 

However, Forex traders get the benefit of having liquidity easily. In simple terms, this means that you can easily trade any fiat currency with another. Liquidity with Forex also guarantees that large trades won’t change dramatically on the asking price. This is, however, the opposite of crypto traders.

That is the disadvantage of crypto trades. The price can shift immediately on big orders, meaning that copying others’ trading strategies require constant revision as what worked a few hours ago may no longer be viable, especially when dealing with lesser-known altcoins. 

Nonetheless, crypto trading is still growing as it is relatively easy to jump in and start trading immediately. There are a growing number of professional crypto traders whose strategies you can emulate to make lucrative yields from your coin holdings. 

Although volatility is high in cryptocurrencies, large coins are continually doing better as crypto gains more mainstream use cases, which means the instability decreases. For instance, over the years, Bitcoin has seen less dramatic volatility shifts, which sometimes can be more synonymous with traditional stocks. 

This is even more prevalent as crypto exchanges continue to witness deeper liquidity, and traders understand how digital assets behave in the market. Ultimately, this is making the application of social trading easier and more reliable in crypto markets. 

Platforms Offering the Best Crypto Social Trading

There are a growing number of well-established Forex brokers offering crypto social trading in 2020.

One example is eToro, a multi-asset investment platform that enjoys a high profile within the crypto space. The platform, which is hailed as the world’s pioneer of copy trading, enables virtual assets such as BTC to be traded alongside stocks, ETFs, and commodities.

On Tuesday, October 29, 2019, eToro announced the launch of its CopyTrader trademark feature in the US. This feature allows traders based in the country to set their accounts to automatically copy the trades of all the top-performing crypto traders on the eToro platform.

The trades are copied in real-time and at the same price, which means there is no time differential risk between when the expert trader places their trade, and the same trade is copied.

Similarly, Shrimpy has emerged as a leading platform that offers the best social trading for cryptocurrency. 

In the past few months, the platform has been actively making strategic partnerships with crypto exchanges such as OKEx and HitBTC to simplify portfolio management by creating automated crypto portfolio management systems

These systems work by letting users copy strategies from other successful traders, build an indexing strategy, and connect via the Shrimpy unified crypto trading APIs.

Closing Thoughts

Social trading helps individuals make better investment choices through the power of the community. The strategy involves copying experienced investors’ trades in a fully-automated fashion on an online social trading platform like Shrimpy. 

Forex trading would be more viable for those looking for more stable and regulated assets. At the same time, crypto is preferable for those who love to trade market volatility and where there are low capital and investment requirements.

A creative writer in the field of content writing for the past 7 years. Iulian is passionate about his work and his interest in areas such as technology, travel, sports, literature and gastronomy have aided him to the research quality in articles that reflect these themes. Recently, he discovered the Bitcoin and the blockchain technology and he’s a big fan now.