Copy Trading

How to choose the best copy trading platform

Various copy trading platforms work with many copy trading logic. These usually differ in regards to the lowest copy trading amounts, the lowest amount for a trade that is copied, and the way cash flows in and out on operations for the copied investor are shown in between the copied-copying accounts.

Some copy trading platforms also allow traders to place a Stop Loss order on the whole copy trading relationship, enabling copy traders to control their copy trading accounts personally. So, before you choose a copy trading platform, make sure to follow these steps:

  • Read past reviews about the platform but don’t base your decision on it alone
  • Check their ranking profile
  • Check their automation system
  • Understand the commission structure of the forest trader you are copying from and go for the copy trading platform that is transparent about it.
  • Check the platform that clearly indicate the trader’s performance and level of risk appetite.
  • Ensure it shows in details the trader’s order book and a breakdown of the buy and sell history of the trader.

 

Here is a list of forex brokers that offer copy trading

 

Broker Min Account Size Leverage Spread Review Open Account
FXTM $5 1:1000 From 0.1 Review Visit Broker Demo
24option $1000 400:1 2 Pips Review Visit Broker Demo
etoro $200 600:1 5 Pips Review Visit Broker Demo

 

What is copy trading?

In its simplest form, copy trading can be equated to investment mimicry; setting up your investment portfolio to automatically replicate that of a trusted, experienced investment strategist. Copy trading entails setting up your portfolios to perform the same trades as the signal providers (usually the top rated traders in the market).

Far from being a mere copycat strategy, copy trading require extensive market research, in-depth analysis of broker habits and a willingness to take significant but reasonable risks on the path to profitability. Being a relatively new form of investment trading, copy trading must be approached with care and professional insights: it is simply not enough to identify the most successful traders and set up you portfolio to copy them; this is the mistake many make, and it leads to unwarranted losses.

Despite being a novel investment platform, copytrading is perhaps the most risk averse form of investment available today; seeing as you are modelling your strategies after those of established and seasoned industry veterans. Your investment advisor does the heavy lifting for you; identifying profitable and sustainable investment strategies that would consistently bring you profits, with minimal risk of loss. However, like all investment platforms copy trading carries a risk of loss; but the benefits outweigh the risks, in the long run.

 

How Does Copy Trading Work?

copy trading

Copy trading allows forex copy traders to automatically copy other traders’ positions which are opened and managed by them. Unlike in the case of mirror trading which is a method that enables traders to copy only specific strategies, it connects a part of the Forex Copy Trader’s money to the account of the other trader. Any trading activity which the copied investor makes, such as closing a position, opening a new position, or assigning Take Profit and Stop Loss orders, are also all performed in the account of the copying trader.

However, the Forex Copy Traders often retains the right to un-link copied trades and monitor them by themselves. They also can shut down the copy relationship. Copied traders are often rewarded with monthly subscription fees whenever a trader offer to copy their trades.

 

Benefits of Copy Trading

 

  • Zero Need For Professional Knowledge

Copy trading, in simple terms, is not rocket science. With the right broker you can be rest assured of sustainable yields and profits—although there are still quantifiable risks, you are most assuredly playing safe with copy trading. Doing our due diligence let’s us identify traders who have established a sustainable and consistent success rate in the trading market.

With copy trading you merely need fundamental knowledge of the market; the intricacies, technical details and regimented nature of the market has no bearing on how much you invest in the market. You are essentially riding on the coattails of  established giants.

  • Time Efficient

After identifying serious minded traders with a track record of good yields, all you need do is model you trade platforms after this sustainable pattern. You have no teething pains or need to make trial and errors before hitting the figurative ‘goldmine’. Copy trading is in essence, one of the most bankable forms of trading a new investor can partake in; all you need do is identify viable signal providers; wait for them to make moves; and wait for their signals to bear fruits upon maturity. Investment trading need not be a time consuming effort; like other endeavors, you can look to those who have succeeded and attempt to replicate their strategies on a smaller or larger scale, depending on your capability.

  • Customizable and Adjustable

Despite gaining a reputation as a copycat scheme, copy trading is adjustable and scalable to meet your specific needs. Studying the signal providers portfolios, you can scale down your investment to manageable proportions; to reduce risk or cater to your budget.

  • Diversification of Investments

There is unmatched potential for diversified prospects when it comes to copy trading. You have the opportunity to ‘play’ opposite ends of the spectrum; go big or take small, measured leaps. You also have the opportunity to choose between more risky portfolios like cryptocurrency and forex, or more stable risk averse portfolios like stocks and stable shares. Consulting with you copy trader, and asking for a full breakdown of your options gives you invaluable insights into your potential for profits or inversely, what risks you are actually investing in.

  • Riding The Coattails of Experts

No one is a complete expert at anything, even at neurosurgeon, and especially in more volatile markets like forex, cryptocurrency, and stockbroking. You learn on the go, and with copy trading, you continuously pick up tricks along the way; investment strategies; new investment portfolios; all tricks that continue to be relevant as the world moves towards a more unorthodox investment atmosphere.

Although cryptocurrency and newer investment platforms are relatively in infancy, there are already established market players who have developed a knack for making the right decisions, smart investments, and look to be in the business of making savvy financial decisions—copy trading makes sure you follow the footsteps of those who have established themselves as major players in the new financial landscape.

 

History of Copy Trading

Copy trading is a form of automated trading platform; you preprogram your investment algorithms to mimic a selected investor’s moves; in the bid exploit the experience and probable insider knowledge such an investor may have on such a platform. A study by MIT showed that copy trading, compared to other forms of investment trading had around a 6-10% improvement compared to random investments and non-guided trading.

Copy trading as a strategy gained traction in the past decade, jumping into prominence in 2005 when it was initially referred to as mirror trading. And like a mirror, copy traders mimic the investment strategies of established investors; these investors also began to share their investment history in a bid to create an automated trading system, where others can study their strategy and institute the exact same strategies.

From traditional copy trading, where one investor’s strategy is copied, an evolved platform developed, in 2015;  crowd trading. Rather than copying one traders strategy, an algorithm is formulated to aggregate that of a select few; reducing risks, and maximizing profits. Crowd trading and copy trading are essentially two sides of the same coin; aggregation of expert investment strategy in the bid to maximize your profits.

 

Let’s take a closer look to some of the best copy trading platforms and websites, that helped shape the concept of Copy Trading to what it is today.

 

Zulutrade

This is one of the best forex copy trading platforms out there right now. Although in the general rankings system, ZuluTrade is ranked second place as eToro is ranked first. This offers good forex copy trading service and is a nice platform for first timers. With this platform, a user is free to access an advanced system of the Signal Providers with many other features to personalize the signals replication.

 

eToro

In the world of Forex Social Trading, eToro has managed to rank number one due to the quality of service it provides. This copy trading platform is indeed among the best platforms in the industry, and it helps beginner users to fully understand the copy trade business as it makes use of only simple features which are easy to understand. Etoro’s commitment in becoming the worlds top social trading platform, has lead to some new innovative products and services like the copy-funds, copy-portfolios and copy-dividends.

 

Darwinex

Darwinex is the most innovative copy trading platform among all others on the list. The basics are the same, that is, its users can always benefit from how well other traders perform. But in this case, the service is managed in a completely different way. Darwinex does not allow you to copy another trader, but will only allow you to purchase synthetic assets, otherwise called Darwins, and these assets vary in their prices according to the performance of the trader behind it. If the earnings of a trader increase, so will the price of the Darwins. The more Darwins you buy, the more your investment increases.

 

Ayondo

This copy trading platform makes its choices very clear regarding how the service is used. The strength of Ayondo depends on the top trader’s system where they can gain higher profits and visibility only when they keep a low-risk portfolio. The profile management system is very fundamental and easy for beginners.

 

Tradency

The tendency is seen as the first platform that got involved in this method of investing. The platform came to play in 2005. To be more specific, the type of trading service that is offered here is the mirror trading. The positions which are originated here are gotten from a computer program known as an expert advisor.

 

Looking back, one can argue that copy trading has emerged from social trading, mirror trading, or even the old PAMM managed accounts. As technology advances, so do the practices that forex traders around the world choose to use.

 

What is Social Trading?

Social trading is among the fastest growing on Forex, across various markets. Even with the many social trading forums, there still rank first and have been used by many traders. Those who haven’t tried the social trading yet may have some doubts at first as not being sure whether the activity is worth the time. But as soon as they learn about social trading and the many benefits that come with it, many will opt to join the social trading network.

Social trading, which has gained popularity in places like Europe, has made the forex investment so exciting and much easier than what it used to be. The most important benefit of social trading is the copy trading as this enables a trader to completely copy other people’s trades and make some profit even without having to perform the trade themselves. Because to this important benefit that the social trading network offers, forex trading has been made easy.

 

What is mirror trading?

On the other hand, a mirror trading network enables different traders from the financial markets to choose a particular trading strategy and to “mirror” the trades automatically which will then be performed by the chosen strategies in the user’s brokerage account.

Traders can choose strategies that suit their personal trading needs, such as past profits and risk tolerance. As soon as a strategy is picked, all signals that are sent will automatically be applied to the client’s account.

 

Social Trading Vs Mirror Trading

copy-trading-mirror-trading-social-trading

Although social trading and mirror trading have close similarities, they are many reasons why you can like one. Social trading is among the fastest growing on Forex, among various markets. Even with the many social trading forums, there still rank first and have been used by many traders. Those who haven’t tried the social trading yet may have some doubts at first as not being sure whether the activity is worth the time. But as soon as they learn about social trading and the many benefits that come with it, many will opt to join the social trading network.

However, in the case of mirror trading, the platform enables different traders from the financial markets to choose a particular trading strategy and to “mirror” the trades automatically which will then be performed by the chosen strategies in the user’s brokerage account.

Social trading, which has gained popularity in places like Europe, has made the forex investment so exciting and much easier than what it used to be. The most important benefit of social trading is the copy trading as this enables a trader to completely copy other people’s trades and make some profit even without having to perform the trade themselves.

Because to this important benefit that the social trading network offers, forex trading has been made easy. Mirror traders, however, can choose strategies that suit their personal trading needs, such as past profits and risk tolerance. As soon as a strategy is picked, all signals that are sent will automatically be applied to the client’s account.

 

Final Notes

Your road to financial independence and success, while cannot be completely guaranteed, can be primed and propped up by banking on the investment strategies of leading investors. Copy trading a few select traders, who have made significant killings in the market automatically places you at an advantage in the investment market, seeing as you have a diversified and flexible portfolio. For the novice, beginner or risk-taking investor, copy trading let’s you dabble in the financial market  without having the slightest inkling about the intricacies of the trade market.

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