What is Copy Trading and why you should do it too?

Copy trading can help you build a portfolio that mirrors the success of professional investors. In a nutshell, copy trading imitates the trading behavior of a stock market expert. However, there are advantages and disadvantages to this strategy. What is copy trading, how does it operate, and what can you expect from it?


Definition of Copy Trading

Copy trading is, for the most part, exactly what it sounds like. You select an expert trader to emulate and then duplicate their trading strategies. Let's say a trader you're watching Buys Gold (XAU/USD). As a result, your trading account in your platform will also Buy Gold.

Copy trading can be done manually or using a copy trading platform. The latter allows you to choose the trade activity you want to imitate. Meanwhile, it invests on your behalf. You don't have to do anything because trades happen automatically. However, you still have the option of choosing which investor to follow. Also, make sure your trading account has adequate funds to handle transaction activities.

What Is Copy Trading and why you should do it too?

Copy Trading's Benefits

Copy trading allows you to benefit from someone else's financial expertise and experience. To pick which currency pair or commodity to Buy, Sell, or Hold, you don't need to examine Forex Market movements or patterns. You can just follow the lead of a seasoned Forex Signal Provider. Assume you've chosen someone whose portfolio routinely yields large profits. As a result, if you copied them, you could possibly do the same.

There are a few characteristics to consider when selecting an investor to emulate:

  1. How long have they been Trading Forex?
  2. Trade History
  3. Number of open positions
  4. Trades are often held for a period of time.
  5. Risk Management (% Draw down)
  6. Trading instrument