Is copy trading too risky? Features of this investment methodology
Copy trading investments
Copy trading or copying trades is one of the types of investment that provides for automatic trades of experienced traders. This technique has a lot of features that can be understood even by beginners in trading. For more details on what is Copy trading investments you will find out further, and also consider the main sites that provide this option.
What is copy trading investments and how does it work?
It should be noted that in copy trading there are two important factors for successful trading:
- Proper market understanding
- Trading risk control
Giving your deposit to experienced traders (not necessarily one) you just have to manage risks and analyze efficiency. Ineffective – to reject, and effective – to increase. In general, systematically controlling your deposit is much easier and takes less time than constantly analyzing the market and understanding it correctly.
The right approach to copy trade allows you to solve the first factor of successful trading and focus on the second!
In addition, copy trading gives you the opportunity to trade large volumes. Thus, it allows you to do the same work, but earn from it several times more.
Comparison of the best copy trading platforms
Below you can see the 5 main copy trading platforms. You can choose to cooperate with one of them or use the services of several brokers at once. Why is it worth working with several brokers? First of all, because investors are different, and all of them should be able to copy trading.
|AvaTrade,||trading platform headquartered in Ireland. The project was launched in 2006. Since then, AvaTrade has managed to obtain permission to operate from financial regulators in a number of countries, including Japan, Israel and Australia.||There are no fees for deposits and withdrawals of assets.There are over 1200 assets available on the platform for work, including cryptocurrencies.Wide range of trading instruments.The client service of the project supports 14 languages.||Not the most user-friendly user interface available on the market.Depositing assets can take up to 5 days, and withdrawing up to 10 days.|
|eToro||one of the most feature-rich platforms on the copy trading market. Within the platform, you can repeat transactions both for traders in the traditional financial market and for representatives of the crypto industry.||There are no commissions for copy trading.Access to more than 50 cryptocurrencies.Operational support service.||Geographic restrictions are imposed on the functionality of the platform. Certain eToro features are not available to users in certain regions.|
|PrimeXBT||The broker has been providing services for more than a year with a license to carry out activities.||Careful selection of traders whose signals copytraders can repeat.Simple interface.You don’t need to pass KYC verification.The project has an insurance fund.||There are geographic restrictions.|
|DotBig||Users of the platform have access to a lot of educational materials.The broker supports MetaTrader 4/5 (MT4&5) and a number of other terminals.The platform is available in a web version and as a mobile app.||You can create a demo account.Traders whose trades can be repeated by clients undergo rigorous background checks.Multichannel support service.Low fees.Low threshold for entry.||Work on the platform is limited by the assets available.|
|BingX||The BingX platform was founded in 2018. The project headquarters is located in Singapore. Users of the platform have access to a wide range of tools for conducting operations with more than 150 digital assets.||Low fees.A wide range of digital assets.You don’t need to pass KYC verification.The client service supports 10 languages.||Limitations on transactions with digital assets. Only trading pairs of cryptocurrency / stablecoin are available on the platform.There are no supplementary income programs.|
Is it possible to make money by copying trades?
The copying schemes on different platforms are different, but the principle of operation is the same: the investor indirectly entrusts the management of capital to another person. The amount of income depends on whose trades are copied and how much is invested.
copy trading forex can be used by those who do not have the skills of technical analysis or who do not have time to monitor the market. However, such trading allows you not only to receive passive income, but also entails certain risks: no one guarantees breakeven transactions.
Often copying a strategy completely does not live up to expectations, as successful traders can make mistakes too, exmo.me representative warned. He also explained that the amount of income, in turn, depends on the amount of investment: not every investor decides to entrust a large amount to an outsider, keeping in mind all the costs and risks.
But in general, the idea of copy trading is great, as it helps beginners understand the basic patterns and basic things in trading. DotBig representatives are confident that this is a great tool for beginner traders. For example, it allows you to see what the risk/profit ratio should be, the correct entry and exit points from the market.
What is the difference between copy, social trading and mirror trading?
|✅ Pros||❌ Cons|
|This approach is helpful for newbies. When you have just started trading and have no experience, copying the trades of other traders is the perfect way to understand how the market works.When a trader cannot understand the mechanisms of the foreign exchange market and suffers losses, copy trading is the way to make a profit.Automated deal making process saves investors time.Advanced risk management takes place when investors analyze the statistics, strategies, and other aspects of professional traders.The ability to control losses.||There is a risk of losing money.Speaking of manual CT, traders need to have round the clock access to the platform.The vast majority of successful traders require commissions on successful trades, so the approach includes costs.|
How to choose the best copy trading platform?
copy trader forex can be useful for new investors, but it is hardly more profitable or less risky than other investment strategies. Today you can find simple and affordable services for copying trades, but their effectiveness has not yet been proven by anyone. In addition, most of the major crypto exchanges are not interested in providing such services. But DotBig company is one of those companies that are willing to provide such services.
It should be noted that the best trading system for forex trade copying is not necessarily the most profitable. It is essential to consider the risk parameters in accordance with the strategy that best suits your investment objectives.
Below you can check out the most common issues that the DotBig trader platform faces.
Do I need previous trading experience in order to be a copy trader?
With the help of special services, many mistakes can be avoided and easy profits can be made by simply repeating the actions of successful traders. It is enough to register on the social trading platform, which works in automatic, semi-automatic or manual mode. Then select the trader with the best profitability and subscribe to his trading signals.
Is copy trading too risky?
Copy trading is as risky as regular trading. Invest only what you are willing to lose, start with a small amount of capital and do your own due diligence before moving on to trading.
How can I find good traders to copy?
Many modern mirror trading platforms offer hundreds or even thousands of traders. As a result, you may find it difficult to decide who to follow. Thus, it is always important to analyze, start with a small amount of investment and never risk more than you are willing to lose.