How does copy trading work? 

by Ethan More

Copy trading is not as dependent on other traders’ information as social trading. Copy trading, in other words, allows you to replicate the actions of other traders. To be considered copy trading and not as social trading, you must copy other traders using the automated system offered by your platform.

Copy Trading Mechanics

CopyTrading allows you to connect a portion of your portfolio to the portfolio of a trader that interests you. All trades that were opened by a trader are copied to your account once you have copied them. All of their future actions are also automatically copied to your account. When prompted, you are asked to select an amount to invest in a particular trader. The sum should not exceed 20% of your portfolio in most cases. Based on the amount you have invested, the sums used in trades are a percentage of your portfolio. Your account balance is USD 1000. Although you don’t currently have any trades open, you decide to copy a trader. Although his stats seem promising, this is your first attempt at something like this. You should invest USD 100 or 10% of your funds. One trade is opened by the trader and it’s copied to your account.

Your investment of USD 100 is a percentage of the trader’s overall portfolio. Your investment equals 10% of his portfolio if it exceeds USD 1000. You will trade the same trade for USD 100 if he has USD 100 invested. However, the amount that you invest from your account will be 10% of his portfolio. You don’t need to worry about the math, as the system handles everything automatically.

  • Addition and removal of funds

You can increase your funds if you are happy with the way the trader handles your investment. If a trade is copied to your account, this will increase your investment and your profit. This can increase your risk, however, as you may lose more if the trade is a loss. It is a good idea not to invest in one trader, but to keep your portfolio diverse. You can increase or decrease your investment depending on the performance of the trader. You can increase your profits if you are happy with the results. It is risky to invest more.

  • Individual Trades

You can have different levels of control depending upon the platform where you are copying traders. Some platforms have a fixed system which means you cannot stop following traders after you start following them. Other platforms permit you to manage your funds more easily.

If you don’t like a trade or think you might lose from it if it is left open for too long, you can manually close it. 

What makes copy trading so beneficial?

Trading can be daunting. Trading is not an easy task. Once you add charts and patterns to the mix, it can be overwhelming enough to send even the most experienced trader into panic mode. You can get rid of fear by copy trading. You can trade without any trading experience. You can then see the strategies of successful traders in Forex social trading to learn why. If they are more approachable, they may be able to show you some of their trading secrets and offer some tips. It is mutually beneficial.

Smart is the one who learns from his mistakes. Wise is the one who learns from others’ mistakes. You might not have ever taken up a trade in life. You can still learn from the failures and successes of others what works and what doesn’t. You will soon be able to see all the details you need to trade successfully. All you have to do is take the time.

Last words

A great place to start is copy trading. You can learn from the mistakes and successes of others, and you can also experience their failures. Although it’s a great way to make money on the stock market, there is no risk.

You need to be cautious about which platform you choose, depending on the level of control that you desire over the operations. It is important to be cautious about who you choose as a trader. At the end of it all, you are giving up control over a portion of your portfolio.

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