What Is Copy Trading? How Does It Work?

2 Mins read

Copy trading is an excellent way to trade in multiple financial exchanges. It increases profit inflow without the need for specialist knowledge. Some traders like to refer to copy trading as portfolio management and risk management. This is because copy traders are able to link their account with an expert to minimise their risk. Many people mistakenly think of copy trading as mirror trading. This term was introduced in 2005. Initially, day trading allowed traders only to copy specific algorithms for automated trading systems. However, today it has become ideal for social trading on various public platforms. Simply put, traders are able to copy trades from other traders and incorporate them into their own accounts.

Copy trading is a good strategy for traders that don’t have enough time to trade the markets or stay up-to-date on price action charts. It’s also a good option for novice traders who don’t have enough experience or knowledge but want to learn. It allows traders and investors to see the strategies of successful traders. When copy trading, the most important assets are contracts for differences and the foreign exchange market. Although high returns are possible, copy trading can also be risky as we cannot control the markets and speculate accurately all the time. Traders must remember that past performance does NOT guarantee future results.

Copy trading is quite popular because it permits you to speculate on small price movements with little monitoring. Copy trading, in forex, is simply imitating the movements of other traders’ accounts and positions. It is simple to understand and follow. The trades made by the host trader will affect the amount selected by you. When the host trader executes the trade, it will immediately show in the accounts. Everything is the same, including copying and timing the execution. Most beginner traders do not have the necessary experience or knowledge to trade in foreign exchange markets.

Although learning and profiting can seem more risky in copy trading, it seems to make the situation easier. Anyone can earn money by copy trading. If you don’t have any trading experience, copy trading can be a successful long-term strategy. Copy trading gives traders enough time to conduct research before they move on to trading by themselves. It is often short-term trading but there are many ways to make money in copy trading such as diversifying one’s portfolio.

Copy trading can offer a positive learning experience for new traders. Because they only need to copy, it saves time. In reality, professional traders spend hours looking at price action charts, reading the news and opening and closing trades. They also test strategies in demo accounts and take other steps to improve their trades.

Trading stocks, forex and other flip currencies markets can be complicated and confusing for newbies. If a trader uses copy trading as an approach, it gives them the opportunity to participate in the market, learn, and grow as a trader. While market psychology can be difficult to grasp, copy trading is a great way to start to understand it. It allows traders to quickly learn the terms of the market. Although copy trading is easy to do, traders must learn copy trading tips and  to rely upon their own ideas and strategies.

About author
The author, Dr. David K Simson is a trained radiation oncologist specializing in advanced radiation techniques such as intensity-modulated radiotherapy (IMRT), image-guided radiotherapy (IGRT), volumetric modulated arc therapy (VMAT) / Rapid Arc, stereotactic body radiotherapy (SBRT), stereotactic radiotherapy (SRT), stereotactic radiosurgery (SRS). He is also experienced in interstitial, intracavitary, and intraluminal brachytherapy.