It’s all in the name! Copy trading allows you to directly copy positions taken by another trader. You specify the amount you want to invest and simply copy everything they do automatically in real time – when that trader trades, your account will also make the same trade.
You don’t have to enter any trades and you get the same returns from every job as your chosen trader.
Copy trading is one of the easiest ways to use the expertise of another trader. This also means that you will not lose any control over the result. You still have the ability to close trades and open new ones whenever you want.
Also check: Technology
But by copying another trader, you could potentially make money based on their skills.
In fact, no advanced financial market knowledge is required to participate!
The Story of ‘copy trading’
The history of copying dates back to 2005 when traders copied specific algorithms that were developed through automated trading. Brokers recognized the potential of systems where anyone associated with that trader could automatically copy their trading account. There was no need to constantly monitor email signals or trade “chat” rooms. We think they were onto something…
This gave birth to Etoro and Zulutrade, which allowed traders to connect their personal trading accounts to their platforms. Traders no longer had to submit their specific strategies. The popularity of copy trading has exploded since then.
According to a recent survey…
- 1 in 3 say the traditional approach to the stock market is too complicated and can be simplified by automatically tracking traders
- 1 in 4 investors said they considered social trading in the last year
- Social trading platforms are expected to grow to €40 billion in 2020 (96% annual growth) and €70 billion in 2025 (48% annual growth)
What markets are most suited to copy trading?
You can copy trade on all markets including FX, Indices, Stocks, and Commodity markets.
If you want to enter the FX market but are short on time, copying allows you to get involved without having to learn advanced technical skills. This can be very time-consuming.
It is very simple to trade in and out of different markets if you want more exposure in one market. Maybe you’re less familiar with tech stocks, but you’ve always wanted to trade Apple or Netflix.
Let’s remind ourselves about the FX market, which is by some distance the biggest traded global market:
- The global forex market is worth $1,934,500,000,000
- That’s 27 times bigger than the stock market
- The daily trading volume on FX is 53x that of the NYSE
- More than 85% of FX trades are made only on the majors ie EURUSD, USDJPY, GBPUSD, USDCAD, AUDUSD, NZDUSD, and USDCHF.
- Learn more about FX and how it works
The benefits and risks of copy trading
Benefits
The advantages of copying are the reason why it has become so popular.
what is the goal To find traders who have a good track record and a trading style that you want to emulate?
Or you can spread your risk across your portfolio, allowing you to manage the ups and downs of the markets to trade for the long term.
Accessibility
Copy trading offers an interesting and reachable route to trading. Huge advances in social trading and multiple social trading networks mean this is now freely available.
Upskill your own trading knowledge
Copy trading allows you to follow the trading activity of experienced traders, some of whom have years of expertise and know-how. You can learn from watching by replicating their success and developing your own trading.
Diversification
With the huge variety of trade strategies on offer, you can now allocate your portfolio to numerous providers across different assets. By spreading the risks associated with individual decisions, you can offset losses if one trader performs poorly. You could also potentially make money in several types of market environments.
Ask yourself…
Do you want some exposure to oil because Saudi Arabia is prone to further sabotage? Want to take advantage of intraday moves during Jerome Powell’s press conference? Or will you settle for a quieter life, lower volatility, and perhaps green investing? You can get any exposure you want on your terms by leveraging a wealth of global expertise.
Free time
you can continue to trade in the markets throughout the day as someone you have chosen is monitoring them and trading. This means you can spend time on your other hobbies!
How Does Copy Trading Work?
What is copy trading? It’s all in the name! Copy trading allows you to copy the positions taken by another trader directly. You decide the amount you wish to invest and simply copy everything they do automatically in real-time – when that trader makes a trade, your account will also make that same trade.
Unlike social trading, copy trading isn’t as reliant on the information provided by other traders as it is reliant on their actions. In other words, copy trading allows you to copy the actions done by other traders. In order for the process to be considered copy trading and not social trading, you have to copy a trader using the automatic system provided by the platform you’re using.
Tickmill
Tickmill is the trading name of Tickmill Ltd, a member of Tickmill Group, which is regulated by the Seychelles Financial Services Authority (FSA).
With a proven track record of strong financial results and stable growth, Tickmill has put itself in an enviable position as a trusted market leader and innovator.
Built by traders for traders, our team members have a trading experience that spans back to the 80s and have successfully traded on all major financial markets from Asia to North America. Our mission is to provide retail and institutional clients around the world with an exceptional trading environment that empowers them to reach their full potential.
