By FXTM Staff
What is copy trading?
Copy trading is simple — it allows you to trade by directly copying positions opened and managed by another suitable trader. You automatically copy everything that trader does in the market in real-time.
That means you get the identical returns (or losses) on each trade and you don’t need to have any input or advanced financial knowledge.
Copy trading is one of the simplest ways to use another trader’s knowledge based on their expertise and experience. Importantly, you still have control over the outcome, as you’re still able to open and close your trades if you wish.
The rise of copy trading
Around 15 years ago, brokers initiated the concept of having accounts linked to a trader who could auto-copy their trading account.
Email signals and trading ‘chat rooms’ became a thing of the past when brokers such as eToro allowed traders to connect their trading activity to the platform.
The popularity of copy trading has increased hugely in recent years as more people have realised that they can access financial markets with little prior knowledge. As a result, these types of platforms are expected to grow to over €70bn in 2025.
Mirror trading versus copy trading
Automated trading, like copy trading, comes in different forms.
Mirror trading applies automated strategies based on trading preferences. That may involve replicating the activity of suitable traders, but is centred around the algorithmic nature of a strategy rather than merely replicating all the chosen trader’s transactions.
Copy trading typically involves allotting a proportion of funds to execute all the trades of the copied trader, no matter what different strategies they may use.
How does copy trading work?
Copy trading is automated trading which is easily accessible.
- You allocate funds to a trader to copy trades.
How will you select a trader? Perhaps you like their trading style, risk tolerance or simply the number of followers they have.
You can also use FXTM Invest to help you choose the most suitable traders to copy. FXTM searches and filters lots of different features of traders to make it easier for you to decide.
- Trades are copied using that allocation in the same proportion as your selected trader.
So, if a trader uses 2% of their account balance to open a new position in Apple, your account will make the same trade using 2% of the funds you allocated to that trader.
Click here for more information on how FXTM analyses and ranks their Strategy Managers.
Benefits of copy trading
The aim of copy trading is to emulate traders with a positive long-term track record.
Key advantages include:
- Education – by following successful traders with years of experience, you can mimic their skills when making your own trading decisions. Doing so will give you more confidence to learn about financial markets and to develop as a trader.
- Access to global markets – there are thousands of markets you can trade, and no one is an expert in all of them. This form of trading allows you to copy people who dedicate themselves to specific markets. That means you can tap into a global knowledge base and gain exposure to markets all over the world.
- Diversification – you can copy multiple traders who trade in all types of markets. Instead of putting all your funds in the stock market or into commodities, you can diversify your portfolio by following those who trade different financial instruments, with various styles and timeframes.
As with all forms of investment, past performance does not guarantee future returns. It is vital to make sure you never invest more capital then you can afford to lose.
Visit FXTM today to discover an exciting new way to trade.
*Please note that FXTM Invest is only available under Exinity Limited and ForexTime Limited.
Disclaimer: This written/visual material is comprised of personal opinions and ideas. The content should not be construed as containing any type of investment advice and/or a solicitation for any transactions. It does not imply an obligation to purchase investment services, nor does it guarantee or predict future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available. They assume no liability for any loss arising from any investment based on the same.
FXTM is an international online forex broker offering financial services in forex, CFDs on spot metals and CFDs on Commodity Futures, Indices and Shares.
The FXTM brand is authorised and regulated in various jurisdictions. ForexTime Limited (www.forextime.com/eu) is regulated by the Cyprus Securities and Exchange Commission with CIF license number 185/12, licensed by the Financial Sector Conduct Authority (FSCA) of South Africa, with FSP No. 46614. The company is also registered with the Financial Conduct Authority of the UK with number 600475. Exinity Limited (www.forextime.com) is regulated by the Financial Services Commission of the Republic of Mauritius with an Investment Dealer License bearing license number C113012295. Forextime UK Limited (www.forextime.com/uk) is authorised and regulated by the Financial Conduct Authority, firm reference number 777911.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.”