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%

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 to take your trading up to a professional level, or perhaps you’re just looking for an easier way to improve on the strategies you are already using. If this is the case, copy trading may be for you.

Whatever your reasons, copy trading opens up a world of unique opportunities in the markets. In this article, we’ll explain what copy trading is and how simple it is to get started.

What is copy trading?

Simply put, copy trading allows you to copy trades placed by other traders. The basic goal is to find another investor with a proven track record, and begin copying their trades. Their success may continue and you will be on the winning side of things but if trades do not go in their favour then you will also be copying their losses. Remember to always monitor and keep up to date with the trading performance of the signal providers you are copying.

When we talk about copy trading, there are usually three parties involved:

How does copy trading work?

To be able to start copying someone's trades, first you need to open your own live MT4 trading account. This is the account you will use to follow other traders. It’s worth noting here that once you’ve got a live account, you always have the option to open additional sub-accounts, which gives you extra flexibility. For example, you could use one account for manual trading and another for copying trades.

Next, you need to link your live MT4 account(s) to the Copy Trading app. Once that’s done, you’ll be able to see a list of providers whose trades you can copy. Now it’s simply a case of clicking on a trader to view their stats – this includes things like their past performance, drawdown and the things they typically trade. While copy trading is especially popular in the forex market, it’s not limited just to currency pairs. Each provider or master trader will have their own expertise and preferences for what they like to trade, such as forex, indices, commodities, single stock CFDs, crypto CFDs (not available for FCA retail clients) and more.

Before you confirm that you want to copy a trader, you can adjust the overall risk settings to suit your own goals and risk tolerance. This is important because all traders come from a different starting point – for example, an experienced trader might have more money to trade and a higher tolerance for risk than someone who is only new to trading. The flexibility to follow top traders makes copy trading for beginners the perfect way to start in the financial markets – especially those who lack the time or resources to trade on their own – but more experienced traders do use it as well.

Either way, the ability to change your individual settings helps ensure you remain in control over how much you are risking on each trade.

If all you want to do is copy trades, there is no manual intervention required. You simply click ‘copy’ and your account will automatically start copying the trades of your chosen signal provider. If you would like further information on how to become a signal provider, our guide covers it in detail. You’re then free to go off and do other things while the app will keep running in the background. However, you should always keep an eye on your account, not only to track the performance but also to ensure that you always have enough margin in your account.

Which copy trading platform should I use?

The Axi Copy Trading app allows you to easily connect to your MT4 account and start copying a variety of traders. The in-built leaderboard will give you quick insights about the top provider's performance and help you in choosing the one that suits you. 

It’s worth remembering that you retain full control over your account, meaning you can pause or completely disable the copy trading for each provider at any time. Furthermore, you can control your risk by either mirroring the provider's level of risk and position size or by setting a fixed size per trade.

You can download the Axi Copy Trading app from the Apple Store and Google Play Store now!

Can copy trading be profitable?

If you find a successful trader to copy, copy trading can certainly be profitable. However, trading in general is inherently risky and copy trading is no different. No trader wins every trade, and even though you might have picked them because they have positive results overall, the provider you choose to copy might go through a period of drawdown – meaning that you would be facing losing positions. One way to try and mitigate this risk is to use multiple providers, preferably with different trading strategies/styles to achieve diversification.

Advantages of copy trading

Discover four advantages of copy trading below:

Disadvantages of copy trading

Discover four disadvantages of copy trading below:

Is copy trading too risky?

All trading involves a degree of risk, therefore so does copy trading. However, it is your account, you have full control of it and you can adjust risk parameters to suit your own requirements. Even though you’re copying another trader, it’s always your responsibility to conduct due diligence and not just blindly follow someone because they have proven success in the past.

For example, the trader with the highest return might experience massive drawdowns or could have a very short trading history. Other traders might have lower returns, but demonstrate greater consistency. Unfortunately, there is no way to remove risk from trading, but you can help to reduce it.

What is the difference between copy trading and mirror trading?

Mirror trading and copy trading are similar, but there are some key differences. With mirror trading, you are literally copying whatever the master trader does, including the same position size they place on their trades. With copy trading, you are following the same trading strategy and the exact trades the signal provider is taking, but crucially you can adjust position sizes. This means that if you are not fully confident in all the trades of the master trader, you can reduce the size of your position on certain trades you follow.

#source


RELATED

An Introduction To Forex News Trading

Political and economic news is a powerful source of fluctuation in global financial markets. Even rumors of events such as falling central bank interest rates, lawsuits by governments...

Negative Balance Protection: What Is It And How Does It Work

Contract for Difference (CFD) trading is a popular form of investment, but as with any investment, it involves a degree of risk. Managing risk in trading is critical to protect your capital...

Top Trading Picks 2024: Mastering the Financial Markets for Optimal Success

As we step into 2024, the financial markets offer a kaleidoscope of opportunities for both novice and seasoned traders. With an overwhelming array of advice on financial planning and investment strategies...

The Worst Mistakes to Avoid When Trading Forex

When someone tells you that trading Forex is easy and you can make tons of money with a few flicks of a finger, know that he is either a fool or a charlatan. Before...

What are CFDs?

Have you heard about CFDs? If not, you probably wonder: "What is a CFD?". CFD stands for "contract for difference". It is a contract between two parties, a "buyer" and "seller"...

TOP8 Mistakes Forex Newbies Make

We all can be wrong from time to time. It's a common thing for the people who would like to gain experience in any area of life. There are no actions without mistakes...

How to Stop Exiting Trades too Early

One of the biggest struggles traders face daily is the temptation to exit trades too early. There are numerous reasons one might opt to close a trade too early, ranging...

Optimal & Suboptimal Hours in Forex Trading

In the grand tapestry of financial markets, the needle of time weaves intricate patterns. Among traders and investors, the perennial quest to discern the right moments to enter or exit the market resonates deeply...

MetaTrader 4 vs MetaTrader 5

The MT4 and MT5 platforms are two of the world’s leading trading platforms, used by a majority of traders worldwide. Released by MetaQuotes in 2005, MetaTrader 4 has gone on to gain widespread popularity...

Guide To Choosing A Broker In 2023

Choosing a reliable broker is an important step in the career of a successful trader. It is the broker, being the intermediary between you and the market...

What is a cryptocurrency wallet and how does it work?

To securely store the crypto investments, traders will need a cryptocurrency wallet. Cryptocurrencies are changing the world. They allow for decentralised...

The Most Popular Myths About Bitcoin Debunked

During the existence of bitcoin and other cryptocurrencies, a large number of erroneous judgments have appeared about them, which continue to spread among people even now...

3 Not-so-hot Tips for New Traders From

A new wave of investors, or collectively known as “Generation Investors”, has spurred into the stock market during the pandemic. Research conducted by the FINRA Investor...

Which Is the Best Forex Trading Course?

The world of markets and online trading has a number of particularities. Learning is a blessing. Knowledge is your driving force. Your personal improvement on an ongoing basis is an objective that ultimately aims to succeed in critical situations...

Ultimate guide to trading Cardano for beginners

Cardano has been making waves in the crypto markets since its cryptocurrency, ADA, moved into the top ten largest crypto assets by market capitalisation...

Trade Silver Online: A Complete Guide for Beginners

To start with, what is silver trading? Traders have highly valued silver for many years now. The metal has various usages including jewellery or as a form of currency....

Unlocking Potential: A Comprehensive Exploration into Day Trading

In the fluid and ever-evolving universe of finance, day trading has surfaced as a pivotal activity for individuals desiring to traverse the bustling waves of the stock market...

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...

Trading styles

Like every other trader, whether you are a novice trader or talented expert in the field of trading forex, you come with your own unique trading style. No two traders are alike...

Effective Bitcoin Trading in Five Steps

Rather than starting to invest in Bitcoin, trading Bitcoin can be even more profitable than investing alone. Trading Bitcoin involves taking full advantage of the asset's...

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.