Copy Trading: A New Trend in Forex

—TechRound does not recommend or endorse any financial, investment or trading advice. All articles are purely informational—

The global economy is in a constantly changing state, which makes it difficult to ensure the value of personal funds thus making people look for investment opportunities.

The Forex market is one of the key players in the industry and the most viable way to turn savings into a constantly growing profit. Its potentially profitable nature is based on knowledge and the ability to anticipate economic situations and perform respectively on the market. As not all traders can boast such skills, it makes them explore other Forex opportunities, like Forex copy trading.


What is Copy Trading?


Copy trading is an evolving trend in the Forex market, which can simplify the trading process for those who wants to work with it, yet lacks the knowledge and commitment to the market.

Every new trader, when entering the Forex trade needs to learn a lot of new information, practice various techniques and elaborate on a personal trading style, which is time-consuming. New traders (investors) often just simply copy the best traders transactions and get their profit.

With a regular form of Forex trade, the focus is on learning how the market works and trying to anticipate the correct movement of currency; with copy trading, the focus shifts to the choice of the right trader to follow and copy.


Types of Copy Trading

1.   Manual style

Manual copy trading is based on the personal preferences of the investors. They can analyze a few profiles and positions of professional traders and copy the ones they like and consider the most workable.

2.   Automated style

The automated style is rather inactive. The investors select the traders whose style they prefer, and all the positions are copied and performed automatically. The level of personal involvement is the lowest.

3.   Semi-automated

A semi-automated style is about the balance. The investors review the positions of the traders and choose the positions to trade themselves, yet, the procedure of trade is performed automatically.

Advantages of Copy Trading

1.   No need for expertise

Regular Forex trade requires a decent level of knowledge of all the tools to use and strategies to perform to anticipate market fluctuation. Copy trading is much easier, as all the ‘thinking’ work is done by professionals, and others simply copy their movements.

2.   Learning opportunity

While working with volumes of data regarding the Forex market, new traders have a chance to see how all the strategies and trading styles are performed in real-life trades. By copying the styles and positions of professionals, they can elaborate on their own styles, and later, implement them in individual trades.

3.   Time efficiency

Copy trading may be beneficial in a few ways, yet time is probably the most valuable asset. The Forex market is rather complicated. Despite numerous guides and manuals, it is still difficult to elaborate on all the details of the trade, not to mention their implementation in real trade.

Copy trading can for some, simplify the overall approach as the trade can start after setting up an account on a copy trading platform. It reduces ‘the timing pressure’, as new traders can dedicate as much time as needed to learn Forex basics, while their new trading account will be actively working.

4.   Win-win cooperation

Copy trading can be seen as a positive tool for new Forex traders, yet, professional traders also get their share.

Copy trading requires additional fees and commissions for copying the positions. Therefore, new traders take advantage of someone’s knowledge, as well as professional traders are financially rewarded for their expertise and help.

5.   Unlimited choice

Copy trading is performed through a variety of trading platforms, each of them offering the services of professional traders. Investors can register with a few platforms, study as many portfolios as they want, and choose the best ones to follow and copy.


The Drawbacks of Copy Trading

1.   Dependent position

Copy trading is entirely dependent on someone’s ideas and movements. While enjoying the success of ace traders, it is important to be ready for bad luck. All the losses will be the investor’s responsibility.

2.   No development

If investors side with copy trading as the only form of trade, they will never develop true-trader skills. It will always be limited to a management position.

3.   Additional fees

Copy trading involves additional fees, especially the automated style. Yet, this ‘drawback’ is rather logical, as no expertise should be shared for free.

Forex copy trading is just like traditional Forex trade, but may in some circumstances be more time and money-efficient.

With copy trading opportunities, every new trader can follow the steps of more seasoned traders, and get their profit regardless of the knowledge they have. Copy trading can be used as a way to get passive income, or as a preparatory form of trading before starting the individual trade.

—TechRound does not recommend or endorse any financial, investment or trading advice. All articles are purely informational—