These days, more and more people are looking for simpler investment methods that don’t require a large deposit. One of these is to start trading stocks, forex, or any other asset class through an online platform. But even though it’s a simple method that doesn’t require much to start, you need to do a lot of research while formulating a trading strategy. That’s where copy trading comes in as a potentially effective method since you don’t have to do a lot of research. Here’s why it’s a much better method, how it works, and how you can get started.
How Copy Trading Works
In copy trading, you, along with a bunch of other traders, follow the same trades as an expert investor. It’s effective for all financial markets, whether you prefer stocks, cryptocurrency, or forex. The reason this approach is so effective is that you’re copying the same trades as an expert, which increases your chances of making a successful trade.
In copy trading, you can go about the process in two ways. You can automate the process so your account automatically has the same position on a certain trade as the expert you’re following. Or, you can get notified every time they make a trade and then manually filter through them to choose which trades you want to copy.
Regardless of which option you choose, you’ll be able to save time and increase the likelihood of making a return on your investment as well. Just make sure you choose the right investor to copy. Copy Trading Critic can give you some insight on choosing the right one.
How You Can Start Copy Trading
Considering how copy trading can be highly profitable, it’s a lucrative approach for many trading beginners. One of the main reasons why it’s the go-to approach for beginners is that it allows them to learn from highly experienced traders. In the long-run, it can encourage them to formulate equally effective strategies of their own.
Moreover, you don’t have to spend hours doing research on complex market phenomenon. To get started with copy trading, you must make an account with one of the reputable copy trading brokers out there. Then, simply enter your trading priorities and metrics into the system. The platform will then provide you with a list of expert investors you can copy, along with their successful trades.
This helps ensure that you’reactually following an expert and not someone with a limited history of making good trading decisions.
The Difference Between Copy Trading and Social Trading
If you’ve ever heard of mirror and social trading, you’reprobably wondering how it’s different from copy trading. While there are some similarities, they’re still different concepts. In fact, copy trading stems from a broader method called social trading, in which you invest in financial markets based on the advice of an expert trader. The process of social trading isn’t limited to simply copying trades but sharing investment opinions through a variety of social media platforms. Investors then use these insights to make informed trading decisions.
Here’s how copy trading is different from social and mirror trading:
- In copy trading, you use trading bots to make the same trades as an individual investor.
- In mirror trading, you use algorithms to decide on an optimal general strategy, which you decide by looking at the actions of various traders.
- In social trading, you look at other investors’ trading behavior, regardless of whether or notthey’re experts, and make the same trades as them.
Bottom Line
In a nutshell, copy trading is a highly efficient way for beginner traders to learn from experts in the field. It allows you to choose an expert investor with the same trading priorities as you, and then automate your account to take up the same positions. While it derives from mirror trading, it’s different because you’re only copying individual trades rather than the entire strategy.