HFM information and reviews
HFM
96%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
89%
FBS information and reviews
FBS
88%
XM information and reviews
XM
86%
NordFX information and reviews
NordFX
86%

Selecting Signals in Copy Trading


A few simple tips on how to choose profitable signals for a subscription in Copy Trading, and not to lose your money. These recommendations are also suitable for PAMM accounts. Copy Trading is a very convenient and useful service since it allows anyone to get passive income in the financial markets. Moreover, this income can be tens, hundreds and even thousands of times higher than the interest on bank deposits. At the same time, you do not need to be an experienced trader, you do not need to study all the wisdom of fundamental and technical analysis, you do not need to sit days and nights in front of the monitor, testing the strength of your nervous system.

You just need to select a trader - a provider of trading signals, subscribe, and all their transactions will be automatically copied to your account. All you have to do is watch your wealth grow.

The Main Difficulty in Copy Trading

Easy? Yes, in words. But everything is much more complicated in practice. And the main difficulty is to choose a provider that will really bring you a stable profit, and will not bring you to a heart attack by zeroing your deposit. The signals must be reliable. In order to help the investor avoid a mistake, online monitoring is carried out for each signal by more than 50 parameters on the website of the brokerage company NordFX, which is reflected in the corresponding charts and tables.

Some of these parameters are fundamentally important, while others only complement the picture. An experienced investor can easily deal with them all. But what should beginners do? This service is intended for them in the first place.

This article is intended to give you a few quite simple recommendations. They may not help you choose the best signal. But they will definitely help to discard those signals to which it is risky to subscribe.

Selecting Signals in Copy Trading

Insidious Martingale, or the Most Common Mistake of a Novice Subscriber

A familiar feeling most of us know, greed, lies at the heart of this mistake. Who does not want to earn as much as possible and as quickly as possible! Therefore, looking at the rating of signals, the first thing we pay attention to is profit (Return per period).  Plus 200%, 300%, 400%, 500% per month - these numbers delight our hearts. But in no case should we forget that the greater the profit, the higher the risk of losing your money. Statistics show that such signals do not last long and often end up with zeroing the deposit.

Usually, providers of such signals trade without Stop Loss and use an aggressive strategy based on building up a losing position. A similar strategy is used in the algorithms of many robots/advisors for automatic trading.

This trading method is often referred to as the Martingale method, and it came to financial markets from gambling. A "clean" martingale assumes a doubling of a losing position in order to get out of the drawdown and, as a result, close a series of orders with a profit. That is, you open, for example, a sell order with a volume of 1 lot. But the price goes up and you start to suffer losses. Then you open another order for sell, but the volume is already 2 lots, then another of 4 lots, and more, and more. And you wait until the price turns in the direction you want, and you can close the entire series of orders (with a volume of 1+2+4+8+16+... lots) with a profit.

In addition to the "clean" Martingale with a doubling of the losing position, other increase factors are often used. For example, at a coefficient of 1.5, the order series will look like 1.0+1.5+2.25+3.38+5.06, etc.

This technique works great in a flat, but with a strong trend it leads to significant drawdowns of the deposit, sometimes reaching 85-95%. And in case of a very strong trend without serious corrections, this is a guaranteed way to completely zero the deposit. And such trends are not so rare. Even for the EUR/USD pair, one-way movement can reach 500-800 points. And there is no need to mention how cryptocurrencies are "storming": the jumps reach 25-30% of the token price.

With such a strategy, the charts of balance (Balance) and growth of funds (Equity) can look very attractive for a certain time and represent a smoothly growing upward line. But at the same time, as already mentioned, there are periodical alarming drawdowns in the account (green line on the chart), from which it is sometimes possible to get out (cases A and B), and sometimes they lead to a complete disaster - zeroing the deposit and closing the account (point C). 

Three Main Parameters for Signal Selection

We warn you right away that what has been said below is just our recommendations based on many years of experience. The last, decisive word will be yours in any case. So, what parameters do we consider to be the main ones? This is a combination of: 1) the signal's lifetime, 2) its profitability, and 3) the maximum drawdown. 

Even the ancient Romans used to say "Festina lente" - "Hurry slowly." It is this catch phrase, proven over millennia, that forms the basis of modern money management - asset management in financial markets. There is no need to strive to earn all the money at once. The higher the profit, the higher the risk. And greed is the main enemy of the investor. That is, your enemy!

#source


RELATED

Becoming a CFD Trader: A Comprehensive Guide

What is a trader? A trader is one of the most used words in the financial vocabulary. It seems straightforward: if you trade an asset, you can be called a trader. Still, not everyone who has ever tried...

How to make money on Forex

Are you eager to make some profits on Forex? Get ready for some valuable insights. Ready for your Forex journey?

Basic Concepts Of The Stock Market And Their Applications

A stock market is a trading floor where stocks listed by companies are traded through direct exchanges between multiple parties (OTC). This kind of interaction...

Short-term trading: Features and Tips

Currency speculations on Forex are short transactions ranging from a few minutes to a month, based on technical and news analysis. In contrast to medium...

The Bitcoin's smarter brother: an Octa's guide to Ethereum

What makes this digital asset so unique, and what drove its robust growth over the recent years? In this article, the experts at Octa, a financial broker with globally recognised licences, give a rundown of the ETH's impressive ascent in the world of cryptocurrencies.

Guide to EOS trading for beginners

EOS appeared on the crypto scene with a record-breaking ICO that raised over $4 billion dollars for the development of the blockchain venture...

Forex Market Structure

The Forex market is close to being a textbook example of a perfect market that humanity created. Namely, a market is any place where buyers and sellers meet...

What should you know about cryptocurrencies?

eXcentral is expanding the number of assets and markets available for traders to invest in every month. One of the highest growing markets, if not the highest...

Is MetaTrader 4 good for beginners?

MetaTrader 4 (MT4) is one of the world’s most popular trading platforms, suitable for all types of traders, regardless of expertise. MT4 has become wildly popular for many reasons...

The Crucial Role of Demo Accounts in the World of Trading

In the dynamic universe of trading, demo accounts stand as an invaluable tool, guiding traders through the vast complexities of financial markets and honing their trading proficiencies...

IronFX:Trading and Investing in Gold

Gold is one of the widely traded commodities worldwide, and the most popular precious metal. The price of gold can fluctuate depending on political...

Basic guide to Forex risk management strategies

Trading risk management is vital to becoming a successful trader and making money online. Learn the risks of poor risk management and discover how you could...

MultiBank Group: Top Macroeconomic Indicators To Look For

Macroeconomic indicators are a key part of fundamental analysis. Their statistics provide insight into the state of a particular country’s economy. Macroeconomic indicators...

A Guide to Demo Trading Accounts

Embarking on your trading journey is akin to stepping into a vast, dynamic universe with its own set of rules. Whether you aim to explore the realms of forex, delve into precious metals...

Frequently asked questions about Cryptocurrency CFDs

Bitcoin is a digital currency that was created in 2009. Its creators are unknown, as they disguised themselves using the alias of Satoshi Nakamoto. When Bitcoins are bought or sold...

Mastering Forex Trading with ModMount: A Comprehensive Approach

ModMount invites traders to conquer the Forex market, offering an expansive selection of over 45 CFDs on various Forex currency pairs. This wide range includes major, minor, and exotic pairs, catering to a broad spectrum of trading preferences and strategies...

Common Trading Mistakes and How to Avoid Them

Have you ever wondered what helped all those professionals of Wall Street become successful? You will be surprised, but the key to their reached heights is hidden in their mistakes...

Choosing a trading instrument: how to trade stocks and CFDs on stocks

We continue our series of articles on choosing a trading instrument. This time you will learn what CFDs on stocks are, how to trade them and how such...

What are defensive stocks and why you should consider them?

The market has fallen sharply this year, and investors have seen losses. Question: Can defensive stocks help hedge against risks? What are their advantages?

What is Copy Trading and how does it work?

Are you interested in trading the financial markets but feel like you don’t have the time to learn new strategies? Maybe you already trade but can't find a way...

Vantage information and reviews
Vantage
85%
FP Markets information and reviews
FP Markets
81%
IronFX information and reviews
IronFX
77%
T4Trade information and reviews
T4Trade
76%
Exness information and reviews
Exness
76%
Just2Trade information and reviews
Just2Trade
76%

© 2006-2025 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.