When you do copy trading, you allow the trading software to copy another trader´s actions. You are trading with your own money, and profits and losses are yours – you are just copying someone elses actions on the market.
Copy trading can be profitable, but profits are never a guarantee, not even if you follow master-traders with a highly successful history. As always, it is unwise to risk money that you can not afford to lose. This is true for both standard trading and copy trading.
There are many trading platforms available online that makes copy trading very easy, and where you will be given access to a wide range of master-traders to chose among. Two of the most well-known platforms are MetaTrader 4 and Meta Trader 5 (commonly known as MT4 and MT5, respectively). These two platforms are available through a wide range of brokers.
Many brokers available
In the past, finding a broker that supported copy trading could be a bit tricky, and traders sometimes stuck with unsuitable brokers simply because there wasn´t a lot of alternatives available. Today, the situation is very different, as there is a wide range of brokers to chose from if you want to try out copy trading.
A few examples of brokers compatible with MT4
- FP Markets
- Global Prime
- IC Markets
- ICM Capital
- IFC Markets
- MultiBank FX
- TP Global FX
- Trader’s Way
A few examples of brokers that are not compatible with MT4
- Global FX
- LH Crypto
Copy trading vs mirror trading
With copy trading, you are blindly copying the master-trader´s actions, since the software is opening and closing positions for you. Mirror trading is similar to copy trading, but is more about replicating certain strategies.
Is copy trading only for forex?
No, copy trading is available for a wide range of assets and products, such as:
- Company shares (stocks)
- Derivatives, such as options
- Contracts for Difference (CFD)
- And of course, both forex and cryptocurrencies
Copy trading is also available for speculation on indices (indexes).
Cryptocurrency copy trading
Copy trading is available for various cryptocurrencies, including Bitcoin, Litecoin and Ether.
Copy trading is availabe for both crypto-crypto pairs and currency pairs where one of the currencies is crypto and the other one is a traditional currency (e.g. USD or EUR).
Examples of platforms where you can do cryptocurrency copy trading are eToro, 3Commas and Coinmatics.
Before you engage in copy trading, always check the fee structure. Be wise with you bankroll and don´t let it get eaten by fee structure that is unsuitable for your situation.
Doing copy trading can involve various fees, and this will vary depending on broker and platform. There are for instance platforms where you pay a commission to the master-trader in relation to the size of the position.
On a related note, paid subscriptions to signal services can end up costing quite a lot even if each individual subscription is inexpensive. For the novice copy trader, it can be tempting to sign up for way to many paid subscriptions. You don´t even have to go with paid subscriptions if you do not wan to, there are a lot of free signals available if you are interested in trying out signal trading.
Advantages of copy trading
- You can copy a trader with a proven success record. (Of course, past success does not guarantee future success.)
- If you are a novice trader, following a more experienced trader can teach you a lot if you are willing to pay attention and learn instead of just leaning back.
- Copy trading is an easy way to diversify your trading portfolio and spread risk.
- Copying another trader can open your eyes to new markets, assets, techniques and more that you might not have sought out yourself. Copy trading can force us out of our comfort zones.
- In some cases, having less control over our trading is actually good, since it keeps us from making rash decisions in the heat of the moment when markets are going crazy and emotions are high.
Can I do copy trading on a mobile device?
Yes, copy trading is possible on both mobile phones (smartphones) and tablets.
Apps are available for iOS in the Apple Store and for Android in the Google Play Store.