The Forex Industry is coming up with a lot of innovative tools. Almost every competitive forex service provider tries to keep the services or products intriguing, functional & user-friendly to its clients.
Copy Trading is among one of the popular features nowadays.
However, this popularity comes with considerable doubts and queries – something that even the most expert traders may have.
So, what does copy trading means? – and why should you try it? Are there any cons associated with it?
All these questions and much more you can find out about by reading this article.
Key Takeaways
- Copy trading literally means copying another trader’s trades.
- Copy trading platforms allow you to subscribe to traders by paying a fee.
- You need to research before signing up for any trader’s strategy and start copy trading.
- Copy trading is not a get rich quick scheme.
Understanding what Copy Trading is
Copy trading is a new and innovative way of trading stocks. The idea behind copy trading is that if you’re automatically copying the trades of other successful investors, you’ll be able to earn profits as they do. It’s a great way for beginners to enter the stock market as they don’t need any previous trading knowledge since, they’ll just be copying those with more experience.
Process of Copy Trading
Consider Trader A, who has devised a trading technique for a certain financial asset. This method or technique has been thoroughly evaluated on historical data as well as in real-time markets.
Another person, Trader B, has no prior experience with financial markets but wishes to engage and profit from them.
He then navigates to a copy trading site, where he may look for traders using a certain technique, such as Trader A, and duplicate their transactions.
Individuals must pay a fee to use the service, which allows them to imitate and take the same transactions as professional traders.
The traders are doing a service by sharing their trades with others and assisting them in profiting from them. The dealers are compensated for their services by these persons.
This practice of copy trading has its own set of advantages and disadvantages, and it is strongly recommended that people engage in it only after making educated judgments.
A beginner to the financial markets might profit from price swings by simply copying the transactions of more experienced traders using copy trading platforms.
The traders are providing a service i.e., they are sharing their trades with individuals and helping them to reap the benefits. These individuals are in return paying the traders for availing their service.
Copy trading is a term that refers to the act of copying the trades of other traders. It is done to emulate or replicate that trader’s success with minimal risk. It is necessary to be approved by the trader you are trying to copy to copy trade.
History of Copy Trading
The origins of copy trading may be traced back to 2005, when it emerged from mirror trading between investors in the financial markets. Traders were using automated trading to imitate the tactics devised by algorithms. The creators of these algorithms made their investing strategies public, allowing others to follow in their footsteps.
Who is suitable to use Copy Trading?
Usually, Copy trading is suitable for two types of people:
- Beginners, as they do not know how to seal a successful trade.
- Investors who lack trading experience and time for themselves.
Copy trading is automated trading, so it has a lot of scope for both novice as well as expert traders. One can either copy trade, understand the strategies, and seal a successful trade or just invest without worrying about making good trading strategies.
Learn about the benefits of trade copying
Copy Trading is a strategy that traders use in the hopes of benefiting from the strategies that other traders are using. The underlying fact behind this strategy is that when traders as providers share their trading ideas, trends, and strategies with other traders, they will not only be able to learn more about what’s happening in the market, but also how to trade it better. Copy Trading is also seen as a good method for developing good trading skills because it will allow you to carefully watch and study the best traders to see what works best for them.
Features of Copy Trading
Copy trading is basically a system based on binary options wherein traders copy other traders’ trades. This means that one trader can see all the trades of another master trader or provider, and if he likes the trade, he can copy it himself. The main benefit of this system is that traders can copy successful traders without having to spend any time or effort doing research themselves.
How to Copy Trade Like A Pro
Copy trading is not actually that much complicated. There are, in fact, three steps that you will have to do – steps that even the amateur trader can handle:
- Choose a reliable broker and in this case, you can go stick to the regulated ones, and research extensively. A reliable broker will not only be able to offer you a greater choice of assets, but they will also be able to assist you with a well-set dedicated customer support service.
- There are lots of automated platforms that you may go for. The most popular is CapitalXtend. They are highly professional, and they provide step by step tutorials for their CopyTrading.
- Once you open an active trading account, you must look at a list of potential providers – analyzing their stats and trading style thoroughly. You should be able to analyze their past performances, along with their risk profile and the offers they provide. Go for the provider that seems to suit your trading goal.
Copy trading is used by beginners and professionals alike, as it can not only give the trader a boost, but it may also amplify their profitability with barely any effort. You would practically be using the investor’s ability to mirror your success.
Top copy trading platforms:
- CapitalXtend
- FXTM
- eToro
- Zulu Trade
- Ava Trade
These platforms are not listed in a serial order indicating the best or worst. Every platform has its own uniqueness, and it is upon the individuals to narrow down on one platform and go ahead with it.
Conclusion
Trading is a business which provides people with the opportunity to make money by buying and selling digital currencies. It is considered as an asset class, with many trading centers functioning for this space. Copy trading is one of the easiest ways to get into cryptocurrency investing.
