Copy trading enables investors to mimic the actions of other investors by automatically taking the same or similar trades. In 2005, it evolved from automatic trading and quickly gained traction among ordinary investors.
What is Copy Trading?
After a decade of growth, the industry plateaued when people realized it wasn’t as lucrative as promised. Most traders mimic the performance of those who have already failed, which is why 70% to 85% of traders end up in the red.
Copy trading, which had been in decline for three years, recently resumed its upward trend, largely thanks to the rise of cryptocurrency trading. Younger traders flock to copy trading platforms instead of learning the Forex market fundamentals.
Many investors who engage in copy trading do it via their mobile devices. Copy traders don’t trade. Thus, they don’t need as much computer screen real estate as other traders to research various assets.
Is it legal to engage in copy trading?
Legally, brokers provide this service, but it varies by jurisdiction. The UK’s Financial Conduct Authority (FCA) intended to regulate copy trading platforms as investment managers in 2014.
Can you explain how copy trading operates?
Copier firms hand-pick which traders they will fund to replicate a successful approach. The trader’s activities are reproduced in the copier’s portfolio via the copy trading platform.
Distinctions Between Copy Trading and Mirror Trading
Mirror trading is similar to automated trading in that it follows an established plan without requiring human intervention. Individuals engaging in copy trading have more leeway in selecting which traders to replicate and how those trades are modified.
More experienced traders with larger accounts should consider mirror trading. It’s possible to incorporate hundreds of traders’ thoughts and encompass a broader range of macroeconomic indicators. The advantage of copy trading for individual traders is that it allows them to follow the trades of a single trader.
Since retail traders typically deal in much lower volumes than professional traders, copy trading is a sensible option. The former can make trades as small as 100 units, whereas the latter must have a starting capital of 10,000 units or more.
Institutional & Retail Clients
Mirror trading developed amongst professionals, while copy trading evolved at retail-focused internet brokers.
Benefits of Copy Trading
People interested in the financial markets but don’t have the time to learn how to trade can benefit from copy trading. Several authorities are considering reclassifying copy trading platforms as investment advisors because it amounts to account management. Every copy trader must keep a close eye on their finances and never blindly follow a method.
4 Best Copy Trading Platforms in September 2022
Here is our list of 4 best copy trading platforms:
Over 2 million traders call FXTM home, and the firm’s excellent execution statistics have been verified by Big Four accounting firm PricewaterhouseCoopers Limited (PwC). Active traders can reduce expenses even further thanks to the Loyalty Program, which is capped at $10,000 but still offers a commission-based cost structure among the most trader-friendly brokers.
FXTM Invest is optimized for copy trading, and the company has published a detailed manual on the subject. FXTM was recognized as the Best Education Provider for 2020 because education is essential to the company’s mission. It also offers high-quality research that helps develop new offerings. FXTM has created a complete FXTM review.
Another popular option for copy trading that uses its patented methodology is OctaFX. Although it is unlicensed to operate as a broker, it is rapidly gaining new customers.
With over 1.5 million client accounts, it’s safe to assume this broker provides a reliable platform for trading. In addition to the market leader MT4, its failed successor MT5, and the ECN’s favorite cTrader, traders can choose from three trading platforms.
The FP Markets
Australian Securities and Investments Commission-authorized FP markets opened for business in 2005. Trading over 10,000 equities and shares, including those of publicly mentioned Hong Kong and Australian companies, is a major selling factor for most investors using this broker.
FP markets also provide trading in 60 different currency pairings and crosses, 11 other stock indexes, the major commodities, and five different cryptocurrencies, including Bitcoin.
In 2014, New Zealand was the site of the launch of BlackBull Markets. BlackBull Markets is an ECN broker, providing raw spreads and commissions like many other antipodean Forex brokers. New Zealand’s Financial Services Providers Register (FSPR) oversees them, allowing leverage of up to 500:1 on select Forex currency pairings.
BlackBull Markets is a multinational company with a presence in New York, a branch office in Malaysia, and its global headquarters in New Zealand.