It’s all in the name! Copy trading allows you to directly copy the positions taken by another trader. You decide the amount you wish to invest and simply copy everything they do automatically in real-time – when that trader makes a trade, your account will make that same trade as well.
You do not need to have any input on the trades, and you get the identical returns on each trade as your chosen trader.
Copy trading is one of the easiest ways to use another trader’s expert knowledge. It also means that you don’t lose any control over the outcome. You still have the ability to close trades, and open new ones when you want.
But by copying another trader, you could potentially make money based on their skills.
In fact, no advanced knowledge of the financial market is required to take part!
The history of copy trading goes back to 2005 when traders used to copy specific algorithms that were developed through automated trading. Brokers recognised the potential of having systems where any linked to that trader could automatically copy their trading account. There was no need to constantly monitor email signals or trading ‘chat’ rooms. We think they were onto something…
Out of this were born Etoro and Zulutrade who allowed traders to connect their personal trading accounts to their platform. Traders no longer had to submit their specific strategies. The popularity of copy trading has since exploded.
Copy trading is automated trading made easy. Here’s a simple step-by-step guide:
You can copy trade across all markets, including: FX, indices, stocks and Commodity markets.
If you want to enter the FX market but are short of time, copy trading allows you to get involved without having to learn advanced technical skills. This can be very time-consuming.
It is very simple to trade in and out of different markets if you want more exposure in one over another. Perhaps you are less familiar with technology stocks but have always wanted to trade Apple or Netflix?
Let’s remind ourselves about the FX market, which is by some distance the biggest traded global market:
The advantages of copy trading are the reason it has become so popular.
What is the goal? To find traders that have a strong track record and trading style that you want to emulate.
Or you can spread your risk across your portfolio which will enable you to ride the ups and downs in markets so that you can trade over the long-term.
copy trading offers an interesting and reachable route into trading. Huge advances in social trading and the multiple social trading networks means this is now freely available.
copy trading allows you to follow the trading activity of experienced traders, some of whom have years of expertise and know-how. You can learn from watching by replicating their success and developing your own trading.
with the huge variety of trade strategies on offer, you can now allocate your portfolio to numerous providers across different assets. By spreading the risks associated with individual decisions, you can offset losses if one trader performs poorly. You could also potentially make money in several types of market environments.
do you want some oil exposure as Saudi Arabia becomes prone to more acts of sabotage? Do you want to take advantage of intraday moves during Jerome Powell’s press conference? Or perhaps you are content with a quieter life, lower volatility, green investing perhaps? You can get whatever exposure you want, on your terms by tapping into a wealth of global expertise.
you can continue to trade in the markets throughout the day as someone you have chosen is monitoring them and trading. This means you can spend time on your other hobbies!
The main risk with copy trading is an obvious one – you are taking part in some risk with financial implications. Trading by its nature is a high risk, high reward endeavour.
copy trading, like with any trading in financial markets, involves putting some of your capital at risk. Inevitably, the market risk associated with this means you can lose that capital as the assets your chosen trader has bought and sold may be prove unsuccessful.
choosing a long-term reliable trader to copy can be difficult. It is up to you to do your own homework to make sure you understand your chosen traders. Sometimes, results can be too good to be true, or a trader is going through a hot streak which means a drawdown is close by.
as with any financial trading, there is risk involved if the assets being traded are illiquid i.e. how easy is it to exit the positions held. You also need to be aware of other areas like what costs are included in the copy trader’s returns and is the bid/offer spread already included in published returns.
Most software will have the option of three types of copy trading functionality – automated, semi-automated and manual.
FXTM offers the industry's leading FX trading platforms MT4 directly on your PC, MAC, mobile or tablet so that you can trade at your convenience whenever and wherever you like.
The advanced technology of MetaTrader combined with FXTM’s unparalleled trading services, offers a high quality experience for the user.
There are some basic terms that you should know before stepping foot into the world of copy trading.
We’ve put together a useful list right here:
Diversification
Drawdown
Equity Line
Fundamental Analysis
Investor
Mirror trading
Money/Risk management
Signal Provider
Slippage
Social Trading
Stop Levels
Symbols
Technical Analysis
A more extensive glossary of terms can be found here.
FXTM Invest is our unique and innovative way to find the most suitable traders to copy.
FXTM Invest lets you access to the opportunities of trading without any advanced technical skills.
You retain full control of your money and you only pay a fee to your Strategy Manager when they generate a profit for your Invest account
Why not visit FXTM Invest to get started?
Choose experienced traders, follow them, and sit back while they do all the work.
We analyse and track our Strategy Managers 24/7, 365 days a year. We rank them based on their trading performance using numerous performance and quality measures.
You can search and filter by investment return, risk profile, trading style and many more criteria to enable you to find the best strategy for you.
Go to Strategy Manager page to check out our top performing managers.
Already an experienced trader? You could earn additional capital with your FX skills by becoming an FXTM Invest Strategy Manager. We provide you with the tools and the platform, while traders around the world follow and invest in your trading strategies.
Visit FXTM Invest to get started.
