The social trading market is big. It will grow from $2.2 billion in 2021 to $3.7 billion by 2028, as forecasted by Research and Markets. Copy trading is one of its main driving forces. Below are the key things both investors and traders should know about it. In simple words, copy trading is a service that allows users to automatically copy trades executed by experienced traders. Investors can track the history of traders’ orders and see their overall performance. All they need to do is to choose a trader from the ranking and start copying. Often, traders create their own chatrooms to share and discuss useful financial data, market insights, and trading strategies they use.
Copy trading has enjoyed greater popularity with Forex brokers, although some crypto and stock platforms also hold a significant market share.
How does copy trading work?
Copy trading platforms differ when it comes to specific conditions. In this article, we will explore the copy trading platform of OctaFX featured in the latest Research and Markets report. This platform has master traders and users copying their orders, called copiers.
- Master traders allow investors to copy their orders automatically. This way, they help novice traders and those interested in investing get a first grasp of financial markets. Master traders often have their own chatrooms where they share useful insights, explain the logic behind their trading strategies, and chat with their copiers.
- Copiers duplicate orders of master traders to their own accounts. Usually, they do it to start profiting while still learning about trading. They have extensive analytics to help them choose the master trader they want to copy, including risk score, equity, performance details, and order history.
When it comes to the role of the broker, it simply provides a platform where copiers find master traders. OctaFX doesn’t charge either master traders or copiers any additional commission. As the broker profits from markup—a small share in the difference between the price at which traders buy and sell an instrument—it constantly tries to bring on board new clients. Copy trading service offers a way of entering the financial markets for the first time worry-free way by selecting an experienced trader to copy orders from. It often becomes the first step in the journey of a Forex trader.
Copy trading platforms are becoming increasingly popular. The copy trading market is expected to grow from $2.2 billion in 2021 to $3.7 billion by 2028, with a CAGR (compound annual growth rate) of 7.8% during that period. There are several factors contributing to the popularity of copy trading. Among them:
- communication with other traders
- greater transparency since investors can see the trading history of traders
- many traders with different approaches to choose from
- typically no extra fees charged by the broker
- commissions paid only when there’s a gain.
Copy trading has a promising future as an additional service that most brokers or exchanges add to their offering to reach new audiences and markets and provide a gateway to the world of finance for many.
OctaFX is a global broker providing online trading services worldwide since 2011. It offers everything one needs to reach their investment goals, providing top-notch conditions utilised already by more than 11 million clients globally. The company is involved in a comprehensive network of charity and humanitarian initiatives, including improving educational infrastructure, short-notice relief projects, and support of local communities and small to medium enterprises. On a side note, OctaFX has also won more than 45 awards since its foundation, including the 2021 ‘Best Forex Broker Asia’ award from Global Banking & Finance Review and 2021 ‘Best ECN Broker’ award by World Finance.