Copy trading is a form of social trading where a trader copies other traders’ positions in their account, automatically imitating the opening and closing. Here we will look into copy trading, reveal how you can do it with tixee, and explore why it might be a helpful tool for you. Before we get started, let's clarify the principal parties involved in copy trading:
- The provider or strategist is the signal provider or the trader whose trading patterns and decisions are copied.
- The follower, also known as a copier, is the trader who copies the trades.
Copy trading can be beneficial for beginners who don't have enough time or confidence to create their own custom trading strategies or carry out extensive research. Copy trading can also be a useful educational tool as the follower replicates the trading behavior of those with more experience.
The aim of copy trading is to find successful traders with a strong track record and then copy their trades and techniques. In essence, this harnesses the collective wisdom of the trading community, providing clients the opportunity to copy and learn from their peers.
What is copy trading?
In the early days of copy trading, traders could replicate algorithmic trading strategies through automated trading. Strategists would share their trading history, allowing others to copy the activity. As a result, social trading networks were formed. Copy trading usually suits short-term strategies, particularly day trading or swing trading styles. Owing to these shorter timeframes, copy trading also tends to focus on more volatile markets such as forex pairs, indices, commodities, and metals.
How does it work?
Copy trading on the tixee platform can be done by sharing a section of your active portfolio with other traders. This means that open trades get copied automatically onto the follower's account. Followers are in control of the amount that they wish to invest and choose the providers they want to use based on historical and current trading performance statistics.
Who is it for?
Copy trading provides opportunities for strategy providers and also followers. If you are a successful trader with a strong track record and consistent returns, you have the opportunity to share your success with other traders. If you are a beginner and you don't have time to create your own strategy, or you want to try to learn from those who are already doing well, copy trading could be for you.
What is a copy trading leaderboard?
In order to decide whom to copy, a detailed analysis of the provider’s trading history should be carried out. tixee has a dashboard providing advanced data, doing much of the hard work for you. The dashboard has a description of every strategy listed and ranked live leaderboard, which helps to offer more clarity on the provider and their results.
All tixee, clients have immediate access to the social trading portal on the platform with an open account. The central trading portal provides real-time information on the strategies available too, in addition to the leaderboard.
Provider list details information regarding the strategy performance, total returns, and the number of copiers who are actively following. There is also a performance fee that strategy providers can adjust to a maximum of 20%. This means that each time a follower makes a profit, the provider receives a share for their hard work and knowledge - but only after the profit has been realized.
Copiers also benefit from all the information being shared as they have a large database of followers to choose from. There is more visibility with insight into strategy performance, total profit, and market exposure, as well as trading habits. This means that inexperienced traders can not only shadow and profit from successful peers but also learn about the market in the process.
What are the pros and cons?
- Suitable for beginners. Copy traders have other, more experienced individuals doing the research. This means that they can begin to trade immediately, learning at the same time as doing. It’s particularly suitable for traders constrained by time and who can't commit to full-time day trading.
- Suitable for experienced traders. Providers can share knowledge and then profit from the success of those copying them - but only after the follower has booked the profit.
- Portfolio diversification. Copy trading is a great way to diversify your portfolio by trading markets you haven't necessarily traded before and or had time to research.
- Minimal control. Once trades have been opened, the follower lacks control and must fully entrust the provider for the information. Some copy traders can find this challenging to deal with at the start.
- Past performance. Copy traders must still be aware of the risks involved in trading the financial markets. While many providers have delivered impressive historical results doesn't mean that they will continue to do so in the future and under all market conditions. As always - when it comes to the markets, nothing is ever truly guaranteed.
Any questions about copy trading with tixee? Reach out to our friendly team, who are always happy to help.