What is Copy Trading and How Does it Work? |
Posted: March 27, 2021 |
Copy trading is a relatively recent innovation that is gaining more and more popularity in the financial world. Initially developed around 2005 as a "mirror trading" system, copy trading has become increasingly popular in recent years. The phenomenon is one of the latest trends in the world of trading and offers an opportunity for growth to new traders and anyone who enters this world by starting to invest in Forex and online. In a nutshell, copy trading allows you to literally copy the signals and orders of other traders. It is an extremely useful solution for novice investors, who can consequently learn from the best traders with greater earning potential. It can also be an interesting alternative even for more experienced traders who want to diversify their portfolio and follow investors who have achieved excellent results. This system allows you to combine your trading account to a platform that allows the option of copy trading. Through this strategy, it is possible to imitate the trades of other investors, following their moves step by step, on stocks and currencies. Thanks to copy trading it will therefore be possible to replicate investment strategies, following numerous signals also coming from different traders. In your investment portfolio you will have the potential to replicate different signals thus emulating the performance of others and obviously their results. We will also be able to choose between multiple signals and create a personal replica portfolio. But be careful that through copy trading you will simulate the performance of those you want to imitate but, consequently, also all their losses and all their gains. It is often used to learn how to invest in Forex and binary options. Once the trader to follow has been assigned to our broker, he will automatically replicate his positions and decisions by tracing each movement step by step. Copy trading must be done diligently, especially in the beginning, because you can learn a lot from those who you mirror, otherwise you run the risk of not learning anything and find yourself burning accounts when you are trading for yourself. Copy Trading and its Evolution The trading platforms that allow copy trading have assumed, for certain points of view, the characteristics of social networks as they allow various traders to get in touch with each other to share strategies and information. An increasingly popular option thanks to copy trading is precisely that of "social trading". More and more often the platforms that offer copy trading methods have mobile apps so that the investor always has the possibility to monitor the progress of their investments and keep in touch with other traders. Who to Follow Then? Several platforms that provide these services draw up rankings of the best investors, so that anyone who wants to do copy trading can choose to follow those who have performed best. Unfortunately, as many traders are starting out, they are looking for a quick profit and follow the signals of investors who demonstrate stratospheric gains of 300% per annum. Copy trading can become a shrewd weapon for the investment portfolio. It is more advisable to follow traders that have a concrete historical, ongoing and convincing results that lead each year, but did not propose excessively risky moves. An average return that starts from 10% and reaches about 30% can be an excellent strategy for: starting, studying and learning investment strategies through copy trading in order to be able, subsequently, to move in autonomy in the Forex world.
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