Table of Contents

 

What Is Copy Trading And How To Use It In A Profitable Way?

  • What Is Copy Trading?

Copy trading is a technique in which a trader copies the pattern of other successful and active traders’ trade via their brokerage or broker account.

Copy trading allows a trader to copy the opening position, closing position, risk margin, and profit orders. For funding their account, traders can choose funds independently or copy the fund limit.

Insight Tip: When a trader copies the trade from an experienced trader, that trader is called a “signal provider or leader.” Signal provider/professional trader charge a flat fee (low price – monthly) to the trader (Beginner) for copying the forex trading strategies.

  • What Is Mirror Trading?

Mirror trading is a type of trading in which a trader selects pre-existing trading strategies from their broker account. That strategy automatically mirrors the trade – or performs trading action.

In mirror trading, traders choose the trading strategies according to their likings/studies. In this type of trading, a trader can select trading strategies such as risk margin/tolerance, assets investment, past profit, and much more.

Mirror trading offers diversified risk. How? In mirror trading, you manually select the trading strategies, and you study charts and data by yourself.

Insight tip: In copy trading, a trader only copies “all trading action from one trader,” while in mirror trading, a trader can choose various trading strategies from several traders.

Mirror trading could be beneficial and profitable in the forex and stock market. However, selecting trading strategies is difficult because the wrong strategy can reverse the profit line.

  • What Is The Difference Between Copy Trading And Mirror Trading?

  • What Is Social Trading?

Social trading is another mode of copy and mirror trading. In social trading, traders follow successful and experienced traders via social media platforms such as Twitter, trading view, and twitch.tv.

The methodology of social trading is very coherent. On social media platforms, experienced traders telecast or upload their charts and data along with their profit confirmations for their followers. Traders read their charts and trading strategies and mimic them by executing entering and closing positions.

According to the Forum, social trading is inexpensive to gain insight into trading at beginner and expert levels. Social trading does not bind the trader to automated trading; a trader can choose the strategies self-reliantly.

Insight tip: Following an experienced trader is a good technique to learn to trade because social trading platforms not only provide sufficient knowledge about trading, but also you can develop a good portfolio (trading portfolio), participate in pool funds, and share your ideas with others for input.  

  • Best Copy Trading Platforms

Many forex copy trading platforms are available in the financial market (forex, stock, and cryptocurrency). Here is the list of the best copy trading platforms.

  • eToro – First and best copy trading platform
  • IC Markets – MyFxBook, MetaTrader, and ZuluTrade
  • OctaFX – MetaTrader, forex copy trading and cTrader platform suites
  • Prime XBT – 100 + trading tools, forex and crypto copy trading 
  • AvaTrade – Regulated copy trading forex and MetaTrader suit
  • Pepperstone – MetaTrader, DupliTrade, and Myfxbook
  • Tickmill – MetaTrader, Myfxbook, and ZuluTrade
  • How To Do A Copy Trading – Step-By-Step Guide 

Copy trading platforms/brokers have established an accessible and comprehensive method for copy trading. Even a trader with low proficiency in trading can copy trade from other experienced and successful copy traders. Here is a simple process for doing copy trading:

Step 1: Log In To Your Brokerage Account

Firstly, you will login into your brokerage account (e.g., eToro or any other), then you will go to the main menu and see options like “Copy People.” Click on the “Copy People” Option.

Step 2: Study The Portfolio Of The Expert Traders

After clicking the option “Copy People,” the system will take you to the main page where all traders’ names with their profit and loss will be mentioned. Choose a trader with low risk and who belongs to the same country as you are (that is not a pre-requirement, you can choose any trader for copying).

Step 3: Choose The Amount For Trading

After clicking the “trader portfolio,” you will see the option “copy” at the top of the page. When you click “copy,” the system will ask for an amount you want to put for trading. Choose the minimum amount in the beginning, and click on the “copy” at the end of the page. That’s how you will start copying the expert trader’s trade in less than a minute.

Now, you can study and watch the loss and profit values on your home page. Whenever you feel this isn’t working for you, you can click on the trader’s portfolio and click on “stop copy trading.” The system will automatically remove the trader from your main page.

  • Precaution Measures To Take Before Copying An Expert Trader’s Portfolio

All copy trading platforms offer a wide range of information on expert traders. Their portfolio carries the previous history of profits, loss, risk tolerance, and the stocks they are trading with. You need to read or check a few things before clicking “copy.”

  • Check the “risk” level.
  • Stocks they are involved with for trading.
  • Read their graphs.
  • Evaluate their profit sustainability.
  • Make sure your time zone is not collapsing with the trader’s timing.    

With the help of a copy trading platform, copy trading becomes affluent and accessible for all traders. Even if a trader chooses mirror trading or social trading, that can be a beneficial trading strategy.

  • Best Copy Trading, Social Trading, And Mirror Trading Platforms – Comparison

Many trading platforms offer a perfect stage for copy trading, social trading, and mirror trading. Here are the best trading platforms that a beginner trader can choose.

  • Pros And Cons Of Copy Trading

Whether it is manual or copy trading, a trader must know that in trading, he might lose more than he is investing. Trading is a risky profit business with some benefits and faults.

Many copy trading platforms have reduced the disadvantages of copy trading by developing new and effective software. Still, some general pros and cons remain intact with copy trading.

  • Final Thoughts

Copy trading has declined the loss margin; however, it does not guarantee non-stop profit like other trading methods and techniques. Whether a trader chooses the trading copy option via different copy trading platforms or copies the trading moves from social networks, he must be well aware of the fact that every trade lies between profit and significant loss. 

In trading, financial risks are always high, but a low entry threshold might consume the doubt of the increased risk. Copying an expert footprint might also save a beginner trader from making wrong trading strategies. 

Suppose a trader has a high proficiency in trading. In that case, copying might seem less profitable to him as there isn’t any doubt that selecting trading strategies manually (having advanced knowledge) could diversify the profit. Although, manual trading is far more complicated than copy trading.