The Truth about Copy Trading Nobody Tells You

67.28% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how these products work and whether you can afford to take the high risk of losing your money. PrimeXBT products are complex financial instruments which come with a high risk of losing money rapidly due to

Once you have chosen an eToro copy trader that you like the look of, you will then need to allocate some funds. All you need to do is click on the ‘Copy’ button and then enter the amount you wish to invest. If you want to use the copy trading feature at eToro – you will first need to open an account. After all, the platform is a full-fledged brokerage firm that is regulated by three licensing bodies.

does copy trading work

Our website is focused on major segments in financial markets – stocks, currencies and commodities, and interactive in-depth explanation of key economic events and indicators. If you’re following a trader who has a long-term track record of good trades, you’ll probably do well. Trading signals are indicators that describe what market to trade, at what price level to open a trade, and where to place take-profit and stop-loss levels. There are several different types of copy trading, such as mirror trading and social trading. You want to copy trades from different masters with uncorrelated trading strategies—so you can improve your returns relative to risk.

MetaTrader 4 and MetaTrader 5 are two leading signal providers, with thousands of top traders offering free and paid alerts. Regardless, it is always best that you check local law before you start trading. Laws that restrict trading usually regulate brokers,  not individual traders who want to start trading. Copy trading can be a good way to earn a profit and make you rich, but it is important to understand that you will not become rich overnight. If you try to become rich too fast, you will have to copy very high-risk trades, and you will likely end up losing your money.

does copy trading work

If you want a portfolio that matches the performance of investing pros, copy trading may help. In a nutshell, copy trading emulates a stock market expert’s trading activity. If you think this sounds like a smart strategy, keep in mind that there are pros and cons to this approach. Here’s what copy trading is, how it works and what you can expect from it. If you’re not sure what investments you should make then consider working with a financial advisor who can manage your investments to match your long-term goals. Leading providers, such as eToro, offer copy trading on cryptocurrencies, along with dedicated crypto platforms, such as Coinmatics and 3Commas.

does copy trading work

Our Desktop PCs run Windows 11, and we use MacBook Pro laptops running macOS 12.5 to test copy trading on the go. Both copy trading and social trading are available through mobile apps. If you’re ready to start exploring VPS trading with FXTM, contact your dedicated Account Service Manager who will be more than happy to help.

The method used to measure and track profit and loss also influences trade copiers. Review a wide variety of statistics and metrics when analyzing the performance of a signal provider. Analyze data points such as average profit and loss, number of trades placed, and average trade duration. It’s impossible to predict market movements 100% of the time, so you should seek out traders that are statistically consistent. Overall, eToro is our top pick for social copy trading and cryptocurrency trading in 2024. Check out our full-length eToro review to see video walkthroughs of eToro’s user-friendly web platform and well-designed mobile app – both of which are great for casual investors and beginners.

Of course, the strategy might not be the best strategy for all investors, but these systems have worked for many retail investors. After filtering and selecting the trader that focuses on your preferred assets, you may check out more detailed stats on their profile. You may see how many are already following and copying their positions. It can be used to trade crypto, Forex, stocks, commodities, metals, and other financial markets.

  • Investors timing the market typically analyse market trends, fundamentals, economic reports, and technical indicators to forecast entry and exit points.
  • Since the professional trader directs investment decisions, diversification and risk management can also be done.
  • Trades happen automatically so there’s very little you have to do.
  • A new page will open displaying the performance fee you will be charged (in this example, there is none).

The purchased instruments will be held in your account until the master account chooses to close his position or until the stop loss (SL) or take profit (TP) is triggered. CopyTrader is a product that may include CFDs.81% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. You should considerwhether you can afford to take the high risk of losing your money. Many brokers now offer automated copy trading, along with many other features. When choosing the trades of other traders on the platform, you may filter those traders.

You will have to set the details for the traders before the platform can start copy trading. With that said, you have complete control over your account, so you get to decide how much you want to risk per trade. Every trader’s profile is transparent, meaning you can see their bio, performance over time, profit and loss ratio, and the instruments they trade, to name a few. This process works a bit differently; you do have control over whether or not you want to proceed with the trade taken by the copied trader. When the copied trader opens a position, you have a choice whether or not you want to open the same position.

does copy trading work

All content on is handwritten by a writer, fact-checked by a member of our research team, and edited and published by an editor. Generative AI tools are not a part of our content creation or product testing processes. Our ratings, rankings, and opinions are entirely our own, and the result of our extensive research and decades of collective experience covering the forex industry. Such challenges have been known for years, and thanks to broker procedures, regulation, and robust technology, these concerns are mostly non-issues, especially for top-rated forex brokers.

To retrieve the performance stats for a signal provider simply click on their username. Their profile page will open, and you will be able to see their past performance – including their monthly return, total return, realised PnL, unrealised PnL, and maximum drawdown. AxiTrader Ltd is a company incorporated in Saint Vincent and the Grenadines and is not authorised to provide investment services in the EU. Before engaging in any type of financial investment, you should clearly define your financial goals.

Markets are often extremely volatile during important news releases, such as monetary policy decisions on non-farm payrolls. In copy trading, the only research you need to do is to find a profitable trader on a copy trading platform. You must be aware of things of like transaction costs & fees, a possible conflict of interest, and how you’ll have difficulty following the trades of another trader.

Furthermore, you can control your risk by either mirroring the provider’s level of risk and position size or by setting a fixed size per trade. If you do start with a small amount, you might want to narrow down your choice of signal providers to one, as you would otherwise exhaust your margin pretty quickly. Note that some signal providers specify a minimum investment amount to ensure the trades will be going through for the copier. It has been prepared without taking your objectives, financial situation, or needs into account. Any references to past performance and forecasts are not reliable indicators of future results.