Social Trading vs Trading Bots

What is social trading and trading bots?

Social trading as the name suggests depends on what is going on around socially. Simply put, when an investor observes and learns the investing styles, trading behaviors from his or her peers as well as experts, it is called social trading.

He or she basically mirrors the trading styles, and mixes it with his or her personal trading intelligence, his or her trading directions, and develops a viewpoint on the trading market. Here you can check regulated forex brokers who offer social trading or copy trading to their traders.

Trading bots (robots) are trading software that uses machine learning (ML) and artificial intelligence (AI) to carry on trading on an individual’s behalf. The way machine learning and artificial intelligence work are that they artificially learn the trading behavior from the expert traders and investors, and uses that pattern in trading. There are many trading bots with excellent trade performance such as in the market today.

Which is better?

Social trading and trading bots both offer some unique set of points that should be considered to answer the above question. Trading bots are constantly evolving and getting advanced with each passing day. But still, they are lagging behind in the sectors where human mind excels such as:

  • Instinctual trading
  • Sensing the catastrophic threats
  • Being aware of parallel technologies
  • Connecting the dots between different sectors emotionally
  • Each and every human mind work in a unique fashion which gives birth to new discoveries all the time and an edge to trading styles of various traders and investors. This factor is lacking in trading bots as they rely on set and limited patterns “learned” trading patterns from social trading.

Whereas, when it comes to trading bots, although they source their learning from the human mind, they too offer some incredible advantages, they are:

  • Since the trading bot is machine-based, it offers 24/7 trading rounds all over the year, which is the biological limitation of a human being.
  • Trading bots can gauge and screen event worldwide in a matter of seconds and then put a trade forward, whereas human’s assessment is limited
  • Due to the power of advanced algorithms and high-end trading technologies, trading bots can offer unparalleled lightning-fast trade transactions, which are again not possible in social trading.

We can’t rely on trading bots alone:

Trading bots, yes they are great and even exceptional in various ways. But relying on it completely is not feasible. After all, what trading bot is doing is imitating social trading. If left alone to take all the trading decisions on behalf of human traders, trading bots may mistake manipulations for sincere facts. For instance, a trading bot bases its trading decisions on a fake rumor or new spread for wrong reasons. This is where human intervention is needed.

Trading bots still need to catch up a lot before they can be trusted fully. As of now they certainly need human guidance. Like a smart machine they can be used but can’t be allowed on the driving seat.

Our Say:

It is clear that trading bot’s intelligence sources its intelligence from the human mind and its behavioral patterns. So, one way to look at it is that the human mind will always be ahead of artificial intelligence. But another constructive viewpoint to look at the same situation is that artificial intelligence and machine learning can be used to serve the human mind’s trading instinct. Together, these two powers can be more beneficial than them functioning separately. Both of them have their unique plus points, and limitations too. So, while taking full advantage of trading bots such as and governing it with human’s impeccable instincts can be a great way to go about it.

David Cox

David is a finance graduate and crypto enthusiast. He projects his expertise in subjects like crypto and Blockchain while writing for CryptoNewsZ. Being from Finance background, he efficiently writes Price Analysis. Apart from writing, he actively nurtures hobbies like sports and movies.

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