Your investments will be more bearable if you know how copy trading works, especially if you are beginning in the fascinating world of Forex.
Topics on how to create your broker, if you choose to do so, or just how and where to invest can be overwhelming.
At Smart Broker Solutions, we can answer your questions as you get started in the market.
What is Copy Trading?
It is an investment modality with which you can copy the operations of other professional investors. In most cases, these traders are more experienced than the average investor.
With copy trading, you will be able to handle the same positions as the investor you are copying. In this way, you do not copy a strategy to invest, but you follow its operations.
What is the origin of Copy Trading?
In 2000, a type of investment strategy called Mirror Trading was born. In the beginning, they only copied the algorithms generated by automatic trading. The developers allowed traders to observe the history of trades they generated, or shared. Traders could then make their investments based on these proven strategies, thus creating a trading community.
Later, this became a modality in which traders copied the operations of others without considering it a strategy in itself. This is the origin of the boom in social trading as an investment tactic, which is currently in great demand, even for money managers.
How to do copy trading?
There are several ways in which you can copy another trader. You can automatically copy all the trader’s orders such as entry, take profit, and stop-loss. Or you can copy some of them manually simply by receiving notifications of those trades.
In any case, it is necessary to have a trading account, the appropriate software, and devices. MetaTrader is the most widely used trading platform by licensed and unlicensed Forex traders and brokers.
Although this platform has very advanced features, it is easy to use. The confidence it generates is based on its stability and security backed by years of experience.
Copy-trading in Forex
This is the space par excellence for copy trading. It is the largest and most liquid market in the world, and the favorite one to invest in.
In it, you will find brokers who share their movements in FX, allowing you to copy these operations to obtain profits.
Generally, copy trading is done through subscriptions in which you must pay a fee to the trader you are copying.
What are the differences between Mirror Trading and Social Trading?
Mirror trading consists of mirroring a trading strategy. Traders reproduce the style of other traders to invest. In the beginning, the algorithms with the best returns were copied, requesting permission for their execution.
With copy trading, the operation of the expert investor is emulated, so that if it is successful, you will also obtain benefits.
About social trading, the operations to follow are in networks that are created and that are very effective when it comes to sharing them. For this purpose, you will have fully-equipped trading rooms with functions for sharing ideas and developing innovative strategies or repeating effective strategies already implemented.
In copy trading, traders make their investments by replicating the trades of an individual trader.
What are the main advantages of copy trading?
The copy trading has the advantage of helping to diversify the traders’ portfolio, which translates into profits coming from different market options. For example, you can emulate different positions, assets, and strategies in individual markets.
When doing copy trading, it is recommended that you use different traders to obtain multiple ways of investing. You can also do copy trading of various financial products. An example of this is the operations that you copy from the foreign exchange market and also from a commodity trader.
The other option is to trade based on the time frame of the trader you are emulating. You will have the possibility of obtaining benefits in the short, medium, or long term.
In short, copy trading is a lucrative modality that opens a safe way for you to trade, assists you in gaining more knowledge about trading while investing, and is a tool for financial diversification.
So, is Copy Trading for me?
And although it may seem like an imitation strategy, it will allow you to gain confidence and learn the origin of the most successful trades. Copy trading is not just about copying, but one must learn with experience who and when to copy.
We remind you that all operations in these markets carry a risk, and it is essential to study each of the trades you make or copy.
If in addition to using the social trading, you want to have your broker with your social trading system, your best option is Start-Up of Forex, where along with your MT4/MT5 license, you have included social trading, all our developments, advice (with the best training to use the MT4 and MT5 platforms) and 24h technical support.