Social trading platforms draw retail investors online

Social trading platforms are drawing more retail investors into markets through copy trading, public trade feeds and one-click execution. Analysts tracking the sector say growth is being driven as much by online behaviour as by trading tools.

The model has expanded from early copy-trading services offered by brokerages into a broader ecosystem that combines market discussion, social media followings and verified portfolio tracking. As a result, competition has shifted from commissions to audience reach, trader relationships and control over information flows within an app.

From copying to following

One of the earliest forms of social trading emerged through brokerages that let users automatically mirror more experienced investors. eToro was among the first to popularise the model, giving users a simple way to replicate another trader's portfolio in real time.

That approach helped broaden retail access to markets by reducing the need for users to choose every trade themselves. According to the analysis, more than 40% of eToro users actively used the copy feature, highlighting demand for products that make investing a guided activity rather than a solitary one.

At the same time, online communities built around trading ideas grew rapidly. Forums and social platforms, including Reddit communities such as WallStreetBets and services such as Stocktwits, became central venues for retail market discussion, with attention on those platforms often spilling over into price moves in public markets.

The GameStop short squeeze remains one of the clearest examples. Analysis cited in the report found a strong correlation between Reddit activity, trading volume and price action during that period, showing how collective online enthusiasm can influence market behaviour.

More recent examples have centred on individual market commentators rather than message boards. The report pointed to the rise of traders on X who built large audiences through public calls in popular themes such as artificial intelligence and semiconductors, turning social visibility into a form of market influence.

Verified Positions

As that trend developed, concerns emerged over whether traders actually held the positions they claimed online. That gap created space for platforms that link social posting directly to brokerage activity, allowing published trades to be checked against connected accounts.

AfterHour is one example highlighted in the report. The app lets users connect social profiles with brokerage accounts, enabling followers to see confirmed positions and receive signals when trades are opened or closed.

This marks a shift from copying an entire portfolio to selectively following individual trades from named personalities. The structure also resembles practices in crypto markets, where wallet activity can be tracked publicly and linked to traders discussing their views on social networks.

The market remains fragmented, with some apps focused on crypto users and others on mainstream equities investors. The report argues that distinction may narrow as platforms seek wider audiences and retail users grow more comfortable moving between different asset types.

Competition shifts

With trading fees under pressure across the sector, operators are looking for other ways to stand out. The analysis said the strongest positions are now built through network effects, exclusive access to notable traders and products that reduce the friction of joining and placing trades.

Some apps aim to attract new users by making market information easier to understand and act on. The report cited the Pelosi Tracker social account, launched by Chris Josephs, as an example of a simple, widely shared concept that later developed into the Autopilot app, which lets users mirror the portfolios of political figures in their own brokerage accounts.

The appeal of these services often lies in their simplicity. One-click experiences, fewer deposit steps and payment integrations have lowered the barriers for first-time traders, especially in crypto markets, where setting up wallets and transferring funds had previously slowed adoption.

Other operators focus on incentives by recruiting high-profile traders who bring existing audiences with them. Fee rebates, competitions and reputation-building features help attract both traders and followers, creating a loop in which social visibility and trading activity reinforce each other.

Risks mount

The same dynamics that help these platforms grow can also amplify losses. The report said traders can build strong reputations from public calls that become partly self-fulfilling when followers buy into the same position and push the price higher.

That creates a structural tension between traders and their audiences. If a trader exits after followers have rushed in, later entrants can be left holding losses, effectively serving as exit liquidity for the person they followed.

Performance data cited from Fomo painted a bleak picture for users trying to profit from such activity. Of 292,000 wallets analysed on the platform over a three-month period based on realised profits, only 6.16% were profitable, and just 25 wallets recorded net profits above USD $10,000.

The report also warned that visible positions do not remove all information asymmetry. A trader with one public wallet can still maintain undisclosed positions elsewhere, meaning apparent transparency may not reveal the full picture of their exposure or timing.

For newer users, that risk is compounded by herd behaviour. Rapid inflows into a trade can sharply inflate prices, and those moves can reverse just as quickly when sentiment shifts or a prominent trader closes a position.

The broader conclusion was that social trading is becoming a distinct form of market participation in which execution is increasingly commoditised while discovery and distribution matter more.