Copytrading

Before using this technique, traders need to connect a part of their portfolio to that of a trader they admire and replicate their trades.

My list of forex bonuses

Secrets no one is telling you about copy trading forex, copytrading.

Then they follow whatever position the experienced investor closes or opens. Copy trading is a strategy new investors use to take advantage of the benefits the forex market offers, even if they are armed with minimal experience and knowledge. Copy trading is a branch of social trading that implies copying other investor’s account. Traders can do this manually or automatically, depending on what approach better fits their profile.

Secrets no one is telling you about copy trading forex

The forex market offers many investment opportunities and helps investors gain income from exchange rate fluctuations.

The most prevailing type of trading beginner investors perform is copy trading. This technique is popular among people who lack knowledge and expertise in the market and have limited time to commit to learning more about trading. Copy trading makes it simple for traders in the forex market to replicate positions other traders operate. Only because this strategy implies copying it doesn’t mean you’re cheating when using it. Buying and selling are automated, and you need to decide what method works for your account. You check the available positions and try to understand the reasoning behind the operations. When you identify the connection, you can close trades, open new ones, and control the result to work to your advantage .

What is copy trading?

Copy trading is a strategy new investors use to take advantage of the benefits the forex market offers, even if they are armed with minimal experience and knowledge. Copy trading is a branch of social trading that implies copying other investor’s account. Traders can do this manually or automatically, depending on what approach better fits their profile.

Before using this technique, traders need to connect a part of their portfolio to that of a trader they admire and replicate their trades. Then they follow whatever position the experienced investor closes or opens.

This strategy allows following more than one investor. It’s recommended not to risk more than 20% of the portfolio on a single strategy provider because copy trading doesn’t guarantee a safe win. Before using this tactic, it’s vital to analyze a particular market to determine if the strategy the trader uses works. Even when copying the methods of a professional trader, the risk is still high.

How does copy trading work?

This tactic works by relying on social trading systems and social networks. When one investor opens a position, they can share details about it with other people on their network, who can copy the position (or their automated trading systems can decide the strategy fits their requirements and replicate the trade without additional input from the new investor).

The primary investor who broadcasts their operations usually has experience in the forex market, and the copy trader lacks knowledge, so they replicate the first’s actions to gain income.

Copy trading is a popular tactic in forex because it allows for beginners to copy other more successful traders’ positions rather than looking out for strategies to approach the market themselves. When they choose to trade using this tactic, they invest with top social trading forex brokers that allow using this strategy.

A list of secrets no trader will tell you about copy trading

Supposing you want to use this tactic to improve your performance, you need a computer or smartphone and a stable internet connection. Check the brokers’ list that allows this strategy, choose one, create a trading account, download the terminal, pick the leverage, make a deposit and start trading. Here are the secrets all successful traders use when they rely on social trading to grow their wins.

Copy an experienced investor’s operations

Trading with the help of copy trading tactic seems simple. You follow multiple experienced traders on social networks, pick one of the forex brokers that offer copytrading platforms, make a deposit, and imitate operations. But this strategy implies more than meets the eye. If you want to use it successfully, you need to understand how it functions and how it can impact your profit. If you replicate the wrong operations and follow a trader who doesn’t close and open trades similar to yours, you can end up with an empty bank account.

Pick an investor who has consistent profit and an appealing chart. Don’t ignore the spread or buy at the chance , especially if you’re a beginner because the market is tricky, and you can lose your money. You can lose pips as quickly as you win them, so when you copy operations, don’t ignore the possibility of losing money.

When you select a trader to copy, consider your strategy, how often they place the trades, and the risk-to-reward ratio.

Don’t concentrate all your efforts in a place

You know the old saying, do not put all your eggs in one basket. It holds true when you use social trading to open and close trades. So, when you choose a trader to copy, apply these words and not risk everything on a single investor.

Your portfolio is safer and less vulnerable to unexpected changes in the exchange market if you replicate different experts’ trades. The secret to long-term profitability involves diversification. This tactic allows you to diversify your portfolio. Even if you perform a few transactions, they expose you to a wide variety of currencies and operations. Copy more than one trader to have success. You need to understand that even the most experienced investors have bad days and lose money. It’s inevitable, but you boost your chances to complete successful trades when you follow different traders.

Reinvest the profit

Copy trading is profitable if you know how to reinvest the earnings . Use the profit to place other trades, and even if your bank account doesn’t grow immediately, you’ll boost your income in time.

After you win, you can do two things: withdraw the money or reinvest into the system and expand your portfolio. It’s tempting to withdraw your profits the moment you win, but it’s more fulfilling to reinvest the funds into bigger trades.

It’s possible to make money from forex trading, even if the market is risky. When you reinvest the profit, make sure you have a strategy in mind. You cannot predict how much you make from buying and selling currencies, but you can use your past results to predict your future performance. And don’t ever let a bad day deter you from using this strategy because you can take control of your investments only if you embrace the market with everything it has to offer.

What is copy trading?

Copy trading is popular with traders who lack expertise in a specific market and those who have limited time to commit to trading. Here, we explain what copy trading is and how it works.

What is copy trading?

Copy trading is a branch of social trading, where one trader’s positions are copied by another trader’s account when they are opened or closed. This can be either automatic or manual – and it’s up to an individual to decide how they would like to approach copy trading.

Before you start copy trading, it’s important that you have carried out your own analysis on a position or particular market before you commit real capital to it. Remember that even if you are following the methods of an experienced trader, your capital is still at risk.

How does copy trading work?

Copy trading works by relying on social networks and social trading systems. When one trader opens a position, they can broadcast this information to other traders on the network, who can then decide whether they want to open the same position – or their automated trading systems can do it without additional input from the trader.

Often, the primary trader who broadcasts their positions has experience in the underlying market – and the copy traders might lack experience in this specific market, or they might be entirely new to the financial markets as a whole.

Forex copy trading is a popular strategy, because price movements are often small but frequent, and constant monitoring is required. Copy trading in forex means that a trader can simply copy another trader’s positions rather than scanning the fast-moving forex markets themselves.

Trading platforms such as MT4 or an MT4 VPS are popular platforms for social trading due to MT4’s large user base and various online user forums.

Example of copy trading

For an example of copy trading, let’s suppose that there was a domestic market crash in brazil and you wanted to get exposure to the brazilian real. If you felt that you didn’t know enough about brazilian economics, politics or central banking policies to be able to make an informed decision, you could turn to copy trading and the expertise of another trader who is familiar with these matters.

At the same time, you would hope to get some experience and expertise in a market that you wouldn’t normally get exposure to.

However, as previously mentioned, before committing real capital to the advice of another market participant, you should carry out some analysis of your own – even if you are unfamiliar with the underlying market.

Pros and cons of copy trading

Pros of copy trading

Copy trading enables you to diversify your portfolio into markets that you are unfamiliar with but want exposure to

Through copy trading, you can access another trader’s expertise or make the most of seasonal trends that you wouldn’t usually consider as a potential opportunity

With copy trading, you can make the most of your time by basing your decisions on those of traders with proven track records

Cons of copy trading

Copy trading can provide little incentive for traders to do their own research and learn about the markets

Copy trading does not eliminate risk – and sometimes the copy trading notice boards could be used by traders that are seeking to influence a market’s price for their own financial gain

While copy trading can help you when you first get started, it is not the only trading strategy available – but the allure of potential profits with little work might be enough for some people

What to know before copy trading

Before you start copy trading, you should do your own market research – especially if you are unfamiliar with the way that a particular asset works. IG academy and IG community can help you here, with resources and message boards to bring you up to speed with anything that you feel you could know more about.

We also offer in-platform trading signals, alerts and technical chart indicators. These enable you to receive notifications about how a market is behaving. Our technical indicators will help you to analyse historical price action and make predictions about what might happen to an asset’s price in the future.

To start copy trading today, follow the steps below:

Create or log in to your IG account

Do some preliminary market research

Find a social trading board – such as the IG community

Copy the trades within the IG trading platform and open a position, making sure to set stops and limits to manage risk

Monitor and close your position

Publication date : 2020-05-06T15:41:16+0100

This information has been prepared by IG, a trading name of IG markets limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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Best copy trading platforms

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Copy trading is one of the easiest ways you can get started in trading a huge number of assets with little or no experience, and also perfect if you have limited time to dedicate to trading.

This form of trading of course allows you to copy the moves of other successful traders and in many cases to do so through automation or with limited involvement. This creates huge convenience but means you have to completely trust the copy trading platform.

For that reason, we have put together this listing of the very best copy trading platforms you can choose from with top-rated forex brokers.

XM is an extremely well-respected forex broker with more than a decade of operation under their belt having been started in 2009. They also provide some of the most trusted trading platforms in business if you wish to get started in copy trading.

Both metatrader 4 and metatrader 5 are an option with XM if you want to start copy trading. While this may not provide the same level of interactivity as some other dedicated copy trading only platforms, what you can be sure of is a very functional and popular trading platform to apply your copy trades on the more than 1,200 assets offered.

The metatrader platforms and particularly MT4 provide a highly customizable trading interface that is easy to get to grips with and where you can analyze a huge amount of data with ease through the dozens of tools and indicators already provided. This is one of the key elements that has kept the trading platform at the top of the industry for many years.

You can import strategies from other community sources using the eas feature of MT4 or simply copy the trading strategies of others yourself directly. Both methods of copy trading are supported and accessible with a low minimum deposit from $100 for a standard account.

For more information, you can check out our XM review which is full of details, or directly visit XM.

Avatrade is another top-ranked forex broker in europe and around the world that you can count on for your copy trading needs. They have also been around for more than a decade since starting out in 2006. Copy-trading at avatrade is provided by one of the best third-party copy trading platforms in the business, duplitrade.

What this trading platform provides is an extremely user-friendly environment where you can engage in copy trading with the full support of the broker. Duplitrade is very easy to run as a web trader from within your browser and supports a great deal of features to help you analyze and make copy trading moves with direct access provided to a variety of different trading strategies depending on your risk profile.

The whole copy trading funct ion and operation of the duplitrade trading platform blends seamlessly with your regular use of avatrade and you can get started with a minimum deposit of $2,000 and avail of one of the only brokers to offer fixed spread trading.

To start copy trading with avatrade and for more information on this top broker, you can check out our full avatrade review or visit avatrade.

FXTM is another broker that brings you a wealth of experience when it comes to copy trading. They have been operating around the world since 2011 and offering a dedicated copy trading service for a lot of that time. This service is known as FXTM invest.

FXTM invest allows you to get involved in copy trading through the trusted and extremely popular MT4 trading platform which itself brings huge experience. You can engage in copy trading on this platform with FXTM for as little as $100 and with multiple options depending on your needs. Copy-trading with the program can be set to automated, semi-auto, or manual depending on how much involvement you would like.

With more than 250 tradable assets to choose from a wide variety of guides and features to help you along the way, FXTM and their copy trading program and platform are popular choices for traders new and experienced. On mobile, you can use the FXTM trader mobile trading platform to engage in the same level of copy trading as facilitated through FXTM invest on both desktop and web trading platforms.

For more information on all that you can look forward to with the broker, you can take a look at our FXTM review or visit FXTM.

What is copy trading?

Copy trading is popular with traders who lack expertise in a specific market and those who have limited time to commit to trading. Here, we explain what copy trading is and how it works.

What is copy trading?

How does copy trading work?

Trading platforms such as MT4 or an MT4 VPS are popular platforms for social trading due to MT4’s large user base and various online user forums.

Example of copy trading

At the same time, you would hope to get some experience and expertise in a market that you wouldn’t normally get exposure to.

Pros and cons of copy trading

Pros of copy trading

Copy trading enables you to diversify your portfolio into markets that you are unfamiliar with but want exposure to

Through copy trading, you can access another trader’s expertise or make the most of seasonal trends that you wouldn’t usually consider as a potential opportunity

With copy trading, you can make the most of your time by basing your decisions on those of traders with proven track records

Cons of copy trading

Copy trading can provide little incentive for traders to do their own research and learn about the markets

Copy trading does not eliminate risk – and sometimes the copy trading notice boards could be used by traders that are seeking to influence a market’s price for their own financial gain

While copy trading can help you when you first get started, it is not the only trading strategy available – but the allure of potential profits with little work might be enough for some people

What to know before copy trading

To start copy trading today, follow the steps below:

Create or log in to your IG account

Do some preliminary market research

Find a social trading board – such as the IG community

Copy the trades within the IG trading platform and open a position, making sure to set stops and limits to manage risk

Monitor and close your position

Publication date : 2020-05-06T15:41:16+0100

Discover how to trade the markets

Explore the range of markets you can trade – and learn how they work – with IG academy's free ’introducing the financial markets’ course.

Best copy trading platforms

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Copy trading is one of the easiest ways you can get started in trading a huge number of assets with little or no experience, and also perfect if you have limited time to dedicate to trading.

For that reason, we have put together this listing of the very best copy trading platforms you can choose from with top-rated forex brokers.

For more information, you can check out our XM review which is full of details, or directly visit XM.

To start copy trading with avatrade and for more information on this top broker, you can check out our full avatrade review or visit avatrade.

For more information on all that you can look forward to with the broker, you can take a look at our FXTM review or visit FXTM.

Copy trading

Table of contents

What is copy trading

Copy trading, also known as social trading, is a way to automate your trading by copying the trades of other traders. It is often used by newbies that might not yet know how to trade, with the added benefit of helping to teach them on the way. For more experienced traders, it can enable them to step away from their screens if they need to, as all trades are automated.

The goal of copy trading, like regular trading is to open positions on various financial markets including FX, cfds on stocks, commodities, indices and cryptocurrencies, and then to close the position, hopefully once the value of the asset has moved higher. Although, much like trading for yourself, here you can also incur losses too.

This could be a good option for those who lack the time or experience to invest by themselves. For this reason many brokers offer the facility of copy trading. There are a variety of platforms offering copy trading services, and while some are manual, others are fully automated. This enables you to sit back and watch the action.

Advantages of copy trading

There are many advantages to copy trading, here we have covered just a few:

Allows first time traders to familiarise themselves with the financial markets and gain the confidence to trade

Helps new traders to learn how to trade, by watching the actions of other, sometimes more experienced traders.

Enables more experienced traders to take part in the market, even when they are too busy, and not able to invest the time and research they should normally devote to trading.

You can copy trade on various instruments including foreign exchange, stocks, commodities and more.

Creates a community of traders, beginners and experienced alike, who can exchange ideas, strategies and endeavour to improve their trades together.

Open a copy trading account with avatrade and join the success of experienced traders!

How to successfully copy trade

Here are the steps you should take to copy trade.

First, you will need to select a broker to partner up with. Choose a regulated broker like avatrade that offers you security, a wide selection of assets and customer support.

Now its time to open an account on an automated platform. Here at avatrade, we offer well-known options like zulutrade and duplitrade.

Once your account is active, you will see a list of signal providers along with their stats. This usually includes P&L, and risk profile. Select the person/people that best suit your objectives.

Copy investing, or mirror trading became very popular with investors worldwide, mainly because many early adopters have had enormous success and were able to boost their trading skills and profitability with zero effort. Copy trading enables novice investors to do just that. They don’t need to know how to analyse the markets or how to interpret forex signals or indicators.

Novices are using other investors’ abilities and thus increasing their own success rates. Also, copy trading can be used by experienced traders too, as a way of learning new trading strategies from others, and by that, increasing their success in the online trading market.

If you would like to start investing in the stock market but do not have a lot of experience, or you are a seasoned pro who would like to gain insight into the analysis of others, using copy investing / mirror trading could be an excellent place for you to begin.

The rise of copy trading

To begin we need to establish that there are two main types of traders, those who attend seminars, attempt to compile strategies, follow all market trends, and enjoy ‘expert-trading-fees’. Then you have the other group that want to make money with as little input and effort as possible. For the latter, mirror or copy trading was created and has suited many as the perfect solution.

The growth in the past 5 years of copy trading has been exponential, for its main reason is that many traders ‘trust’ this system, and have a comforting feeling that they are not trading alone. Avatrade offers you popular signal providers that are the best in the business.

Copy trading is not only for the unexperienced, a lot of expert traders use copy trading as a means of market research, it saves time and could be part of a new strategy that could be implemented and profitable.

Who provides the trading signals?

Avatrade uses top quality sources for its copy trading. These parties include hedge funds, expert brokers, and money managers. This means that if you use copy or mirror trading with avatrade, you are essentially gaining valuable access to seasoned traders, allowing you to copy their trades and benefit from their experience.

Taking advantage of this trading strategy can be highly lucrative. In fact, many social traders, new and experienced, have had the opportunity to gain direct access to the top traders on the platform and have increased their trading success significantly.

Copy trade with avatrade

We offer you a good choice of some of the most well established copy trading services. We also collaborate with signal providers to get you market alerts and trading notifications.

Here are the products we offer:

Zulutrade – with a large variety of signal providers to choose from

Duplitrade – easily and conveniently copy trades from multiple signal providers

MQL5 signal service – sends signals to MT4/MT5, world leading platforms

The combination of avatrade’s global reputation with the best signal providers, gives traders the security in knowing that their trades are in the safe hands of some of the best traders.

Open your copy trading account with avatrade today!

What are trading signals?

With trading signals, you receive notifications which are like suggestions of what to trade, when to enter or exit the trade and what stop loss or take profit orders to implement. You may receive them by SMS, email or through a dashboard.

Of course, it’s important to use a signal service that gets more successful than unsuccessful trades. However, like all things related to trading, there is always the risk of losing your funds, as no one can read the future. Usually signals are generated on the basis of a variety of technical indicators, especially the strong signals.

You can of course create your own signals, by using technical analysis and implementing studies and indicators on to your trading charts.

Who are trading signals providers?

They can be identified by either humans or by algorithms, which are like pieces of code programmed to identify signals, when ample market conditions are reached.

Here at avatrade we use tried and tested resources and services for our signals and copy trading products. However, once again remember that all trading comes with the risk of loss and you should only trade with what you can afford to lose.

Our signal creators include hedge funds, expert brokers, and money managers. This means that if you use copy or mirror trading with avatrade, you are essentially gaining valuable access to the minds of seasoned traders. This allows you to copy their trades and hopefully benefit from their experience.

The combination of avatrade’s global reputation, coupled with some experienced signal providers, gives you the security in knowing that you can trade or automate your trades with a reliable broker.

Copy trading main faqs

If your plan is only to follow and copy other traders there is no experience required, although it can be helpful in analysing and selecting a good trader to copy. In reality it is often the traders with no experience who like to use copy trading. It can be a good way to begin growing an account, and if you take the time to analyse the trades being made by those you follow it can also be a very good way to learn about trading too. If you’re a new trader and are worried about losing money with copy trading you could always try it with a demo account first before funding your account.

If you take the time to identify good traders to copy you aren’t taking any more risk than when trading your own account. That is to say trading is inherently risky, and there is always the possibility that you will lose money. Also note that the past performance of a trader is no guarantee of their future performance, so even if they’ve been profitable for three years running, they could have their first losing week right after you decide to follow them. As always, never invest more than you can afford to lose.

While it might seem tempting to copy the trader with a 300% annual return, in general these traders are taking on far too much risk and eventually will blow up. Instead look for traders who have at least 1-year trading history and a return somewhere between 10% and 30%. The trader should also be active enough that they are placing a minimum of one trade per week. This ensures that they are trying to grow their trading base rather than just locking your money in a single trade. If you want to spread out your risk you can spread out your copy trading between 2-4 different traders.

Open your copy trading account with avatrade today!

We recommend you to visit our trading for beginners section for more articles on how to trade forex and cfds.

Secrets no one is telling you about copy trading forex

The forex market offers many investment opportunities and helps investors gain income from exchange rate fluctuations.

What is copy trading?

How does copy trading work?

The primary investor who broadcasts their operations usually has experience in the forex market, and the copy trader lacks knowledge, so they replicate the first’s actions to gain income.

A list of secrets no trader will tell you about copy trading

Copy an experienced investor’s operations

When you select a trader to copy, consider your strategy, how often they place the trades, and the risk-to-reward ratio.

Don’t concentrate all your efforts in a place

Reinvest the profit

What is copy trading, how it works and where to start

So you want to find out what is copy trading, how it works, and what are the best options to begin with?

And in particular, you want to find out what is copy trading in forex?

You couldn’t find a better post.

In this post you will find:

Explanation of what copy trade is

Who are the main players

How does signals replication work

Who is the signal provider

Who is the follower/investor

What are the risks

What are the best options and resources to start

79.67% of retail CFD accounts lose money

What is and how copy trading works

Copy trading is an innovative investment methodology.

Today you probably hear more about social trading, and the trend is to call everything with that name, creating also a bit of confusion (read here the differences between mirror-copy-social trading).

For precision sake, here we will discuss specifically copy trading.

With copy trading the investor has the option to automatically “copy” every operation executed by another trader, in order to replicate his performance on his own personal account.

With a copy trading service the investor does not give his funds in the hands of the fund manager, i.E. The other trader (as happens with the common investment methods).

In this case, the investor simply opens a personal trading account, which he keeps the property of, and then, via the copy trading platform, he connects his account to the designated trader one’s.

In practice, funds are always in possession of the investor, there is no delivery of money to a third party.

Simply, with copy trading the investor delegates the management of his account to another trader (or more then one) from whom he automatically copy the trades.

The main players

What are the essential components at the backbone of copy trading?

There are several versions and nuances in the multitude of services offered, but essentially these are the basic components of any copy trading service.

The market

Being a financial instrument, is obvious that the entire structure is developed on a financial market.

The main market on which copy trading was born and grew (due to its immense liquidity) was forex market, i.E. The foreign exchange market.

After that, with the advent of cfds, almost all the other markets and their instruments joined the arena, including stocks, indices, commodities, interest rates, etfs, and even bitcoin.

The broker

Another fundamental element is the broker, your ever-present companion. You can’t invest in almost any market without it.

With copy trading, you need a broker (usually forex brokers) to get a trading account on which to receive, via the copy trading platform, the operating signals of the traders you have decided to copy.

Some leading forex brokers, however, are also copy trading platform themselves. The concept is the same. In any case, you must choose a broker (among those which support these services) and open a trading account (even demo).

In order to see what’s the best option for copy trading, you can simply check our best copy trading software article.

The trader (or signal provider)

The signal provider is the trader you have decided to copy.

Obviously, you don’t choose which traders to follow sight unseen. Each platform allows you to observe and evaluate various data on the trader’s operating performance.

Some platforms require an evaluation of the strategy before allowing it, while others simply record the performance of the signal providers from the moment they subscribe, thus creating statistical data records for the users to consult.

The visibility of these data and their depth and accuracy, as we shall see, are some of the most important elements for a correct selection of the best traders to follow.

The investor (or follower)

This is, of course, your role.

Copy trading is very flexible and can be used for many investment methodologies.

Each investor has his own objective and risk tolerance. Your job is to understand how to translate into practical and specific choices these two components: goals and risk management.

The investingoal’s mission instead is to explain you how to do it best.

The copy trading platform

Last component, of course, is the copy trading platform, without which this would not be possible obviously.

Before the advent of these platforms, investors who wanted to benefit from the experience of other successful traders were using mailing list or chat rooms services, but, clearly, they were not automatic.

As we shall see, there are different types of copy trading platforms, each with its own characteristics, each with its own pros and cons.

It is up to you to decide which one to choose according to your expectations.

Also in this case, investingoal is ready to help you in this choice.

What type of trader are you?

79.67% of retail CFD accounts lose money

The replication process

As mentioned before, there are brokers who are copy trading platforms themselves.

However, for convenience only, to explain the signals replication process, we will refer to the condition in which the brokerage and copy trading services are managed by separate entities.

The copy trading platform is primarily concerned with two things with regard to the actual signal replication tasks:

It acts as an intermediary between the signal provider broker and the investor broker (it’s a broker of brokers)

It handles the replication and propagation of signals from the signal providers to the multitude of investors who copy them, according to the particularities of each one.

Imagine you have a $ 1,000 account, but you want to replicate a signal provider with $ 100,000 account. His hypothetical 1% invested in a new trade is equivalent to your entire capital, and you obviously can’t afford to invest the same amount, otherwise one losing trade would be enough to burn your account.

For this reason, we need to proportionally replicate the trades of signal providers. The copy trading platform takes care of this.

Your job is to give them the necessary instructions, deciding the settings with which you want to replicate every trader.

When the signal provider opens a new trade, his broker sends the data of the same trade to the copy trading platform

The platform receives the data of the new trade

The platform verifies who are the investors who are copying the signal provider, and the personal replication settings of each

The platform sends to each investor’s broker the details for the opening of the new trade, but modified according to the client settings

Each investor’s broker opens the order on its customer’s trading account

And this is all automatic.

And it happens in a few tenths of a second.

Same thing for the closure of the trade, or for a change in the stop or profit parameters.

social trading signals replication process

The signal provider

In copy trading you can consider signal providers like the assets in your portfolio, and that’s why it’s often called a “people based portfolio”.

Each trader has its own characteristics and peculiarities, but there are some common categories under which we can categorize them.

The first category refers to the techniques used for trading, and we have:

Those who use fundamental analysis

Those who use indicators

Those who use price action

Essentially, most of the time a trader specializes in one of these three categories, but he also has a basic understanding of the other two.

We can then group them according to the time horizons in which they operate:

Long-term traders (monthly or yearly horizon)

Swing trader (daily/weekly horizon)

Day trader (hourly/daily horizon)

Scalper (seconds/minutes horizon)

Then, there are various factors you will need to pay particular attention to, for studying the strategy and the performance of the signal providers. Among the most important there are:

How long he has been trading

How many instruments he trades with (is he specialized on one or does he diversify with many?)

How many positions he usually keeps open simultaneously

How many trades he executes on average (per day, week, etc.)

How long he keeps them open on average

What’s the winning percentage

What are the of risk/reward values

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75% of retail CFD accounts lose money

The follower

Investing in a copy trading strategy basically means to become a fund manager.

The fund is your, the capital is yours, and the manager is you.

You then have to decide what are the objectives of your fund, what risks you are willing to take, and then look for the best solutions to build it, i.E. The best assets.

In our case, your assets will be precisely the signal providers.

Many beginners make the mistake of thinking that the only important thing is finding the right traders, and that everything else doesn’t matter.

On the one hand, it is certainly true, but this is not enough.

Think at the above example, the signal provider with $ 100,000 account and you with $ 1,000. If you can’t reason properly, you risk of burning your account even by following the best traders.

The factors on which you need to focus on and to develop as an investor in copy trading are:

Declaration of (plausibile) goals

Recognition, analysis and management of risks

Search and selection of signal providers

Choosing each signals replication setting

Implementation of the strategy

Portfolio management and monitoring

What are the risks

Copy trading is a form of investment, we said that many times.

And as with any type of investment, you are putting your capital at risk.

Anyone who says the opposite, that there are no risks, is lying and is not in good faith.

Here are some of the risks you will be present with, and that you will be able to face.

Not knowing how the platform works

Let me tell you an episode actually happened to an investor.

Instead of taking the time to learn at least how the platform worked, an investor started immediately to replicate some signal providers.

The problem was that, because of the haste and inexperience, he thought he was replicating their trades with 10 micro lots, while in reality he was doing it with 10 standard lots.

This happened exclusively because he didn’t pay attention to the platform settings.

When he realized it, it was too late.

Not recognizing the risks of the signal provider’s strategy

I’m sure that many times you will encounter signal providers with stratospheric performance.

Perfect equity line, with no drawdown, winning percentages close to 100%, steady profits every day.

Let me tell you right away. The strategies behind this type of performance are a mirage, and they hide a sure recipe for failure.

Those are strategies based on techniques such as price averaging down or even worse the martingale. In the short term they may also give crazy results, but in the long run they are definitely not sustainable, and sooner or later they will face certain failure, and it will happen fast.

Not knowing how much capital to assign to each signal provider

You need to know how to allocate your capital on your different assets, i.E. On the signal providers, in order to maintain an optimal risk, minimize losses, and maximize profits.

Otherwise, you risk of giving too much capital to riskier entities, and less to the more virtuous ones.

Not controlling your portfolio

Copy trading is not an activity that you simply set once, then you forget it, and you remember of it only when you want to cash your profit.

Obviously, it should not become a full time job either, as the signal provider one, otherwise it would lose its convenience.

The important thing is to find a balance, in order to constantly monitor the evolution of your fund, and knowing how to deal with adversities and how to react to them.

What are the best options

Now it’s time to give you the best resources to deepen the topic.

We can say that this post is a brief summary of our guide what is social trading (we called so for the reason I said at the beginning, but in essence it’s an extensive guide to copy trading, with 12 lessons).

There you’ll find all these topics treated more thoroughly, point by point.

Here, instead, there’s the link to find out what are the best copy trading platforms.

Etoro (for which we have also an etoro for beginners guide and a detailed review where there’s also an etoro pros and cons section)

Zulutrade (for which we have also a zulutrade for beginners guide)

NAGA trader (for which we have also a NAGA trader review)

I hope I was helpful in this mini copy trading guide.

What do you think about it?

Do not hesitate to write in the comments for any questions, concerns or just to tell us what you think.

77% of retail CFD accounts lose money

Copy trading – beginners guide to trade like the pros!

Copy trading is basically a way to let amateur traders, or complete beginners, automatically copy the trades of more experienced traders.

Also sometimes known as 'mirror trading' or 'auto trading', it lets you browse through the profiles of experienced traders, and see their trading statistics. When you find one you

Like, it lets you set your account to automatically copy all of their future trades.

Who offers copy trading?

There are an increasing number of sites and exchanges offering copy trading, as more and more 'retail investors' (non-professionals) enter the marketplace looking for a way to invest.

To list them here would mean updating it constantly, as the market is growing so fast. I personally use etoro for copytrading as it's the fullest featured and simplest to use that I've come accross so far. It also has the largest user base, so there's more people to potentially copy.

Does copy trading actually work?

How much does it cost?

On etoro, copy trading is free. You pay the normal spread fees for each trade, and there are other fees associated with trading, but there's no charge to copy someone. The people you're copying get incentives from etoro for having copiers, so it works for them too.

Can people copy me?

The people you copy are called "popular investors". If you think you're good enough at trading, and would like to give it a try, you can sign up to their popular investor program.

Is it risk free?

Nope, it's still trading, so assets can go either up or down in value. Learning to pick the right investors takes a little time, but all their statistics and history are there in full view.

How copy trading developed

Let's go back a bit. In the past, if you wanted to invest you had to find a 'broker' who you'd pay commission to make trades on your behalf. The trades could be buying or selling stocks and shares in companies, or a range of other investments.

You could either tell the broker what to buy, or take their investment advice or just let them trade for you.

This is how things worked for a long time. Trading was a closed world in many ways, and brokers acted as its gatekeepers. The rest of us just looked on as a small section of elite society seemed to be making a lot of money in the financial markets.

The rest of us didn't understand how, and didn't really think we ever could. It was a rich person's world.

Trading floors and strange charts

The other traders we saw were all busy yelling at each other in strange rooms and staring at numbers on boards. Trading places was a great film, but really didn't help us all feel like we could belong there. As times moved on, we saw lots of computers, and incomprehensible charts. Things had changed, but they hadn't gotten any simpler. Why has that guy got 6 computer screens!? It looked more exclusive than ever.

Ready to find out more?

The evolution of trading technology

From the old trading exchange floors, to the sleek glass offices was quite a jump. Computers had won, and everything went digital. The internet appeared, and trading floors were on the wane.

The old shouting and yelling in the big trading pits of new york, london and chicago were replaced by computers processing information at unimaginable speed, and traders around the world glued to their screens. Everything had changed, except for the wins and losses. Trading was still trading, and people won and lost fortunes on the money markets.

In an unrelated development, faster internet speeds and better websites facilitated the rise of social media, and it didn't take everyone long to get on board.

Within a decade, social media has become an integral part of daily life. People have now grown up using it, and the 'language' of social media is now so familiar we all take it for granted.

We know what someone's 'profile' is, how to 'follow' them or 'comment' on something - we understand building digital relationships and having everyone in one big communal digital space.

As soon as we were all used to social media, someone had the bright idea of combining the features of our favourite social sites with classical trading, letting everyone join the trading community.

Now everyone had access to live markets, trades happening in real time from around the world, and the ability to share information with each other about what they were up to.

It was never possible before - the technology just didn't exist. And now, the closed world of trading was made wide open, and the 'retail investors' (as opposed to the 'professional investors') started to take note of this sudden access to the playground of the rich.

It was time for everyone to get their piece of the pie. The problem is, trading is still just as difficult as ever, so someone came up with yet another, possibly even brighter idea.

So, let's see, what we have: copy trading makes it simple for traders in the forex market to replicate positions other traders operate. Read on to learn more. At copytrading