Copy Trading - Best Strategies and Platforms

Copying trades on Forex has several undeniable advantages:

• 1

  A novice trader can copy the trades of an experienced trader automatically, which does not require in-depth understanding of the market and time expenditure.

• 2

  There is an opportunity to borrow the strategies of successful traders.

• 3

  You can start with a small amount – from $100.

• 4

  You can get a higher than average profitability.

• 5

  You can stop copying, reduce or increase the amount you allocated for a specific trader at any time.

• 6

  Huge selection of markets and strategies for copying. You can distribute your portfolio among different traders.

As for the drawbacks, there are these:

• 1

  A novice trader can copy the trades of an experienced trader automatically, which does not require in-depth understanding of the market and time expenditure.

• 2

  There is an opportunity to borrow the strategies of successful traders.

We have compiled a rating of Top 10 Forex brokers that meet the strict selection criteria:

• 1

  They hold a license of one of the top regulators;

• 2

  They offer a good quality, reliable copy trading platform;

• 3

  They provide beneficial trading conditions and a wide range of financial instruments.

In order to start copying trades, you need to follow this algorithm:

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  Select a broker that offers this service and open a trading account.

• 

  Connect to one of the copy trading platforms. Several companies, such as eToro, RoboForex, Instaforex have proprietary social trading platforms. However, the majority of other brokers (for example Xero Market) offer third-party developer platforms, the most popular of which are ZuluTrade, MQL, Myfxbook and Duplitrade.

• 

  Perform analysis of trading results of the traders you can copy.

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  Select from one to several dozen traders and set the limit of funds and risks for copying each trader.

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  Monitor financial results.

Having analyzed the services of dozens of brokers, Traders Union experts selected eToro as the best broker for copy trading. eToro’s advantages include:

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  Reliability.

  The broker is regulated in the UK (FCA), European Union (CySEC) and Australia (ASIC), which indicates a high level of reliability.

• 

  Experience.

  eToro is one of the pioneers of social trading and has been offering forex copy trading services since 2010.

• 

  Largest platform.

  eToro social network is the largest in the world. The strategies of over 100,000 traders are available for copying.

• 

  Technological effectiveness.

  There are several dozens of instruments of statistical analysis for selecting traders and monitoring the results.

• 

  Trading conditions.

  The copiers only pay the broker’s commission, which is either low or average, depending on the market. In particular, there is no commission at all on US stocks copying. In addition, the broker offers access to trading 2,300 instruments on the Forex, Stock, Cryptocurrency and CFD markets.

• 1

  Step 1.

  Selecting traders for copying trades. For this, in the open online platform, you need to select Copy People in the menu on the left of the screen. It is best to diversify your profile and select several candidates. Noteworthy, the minimum entry threshold for each trader is $500. You will therefore need around $1,000 in order to compose a small social portfolio.

  

  Past performance is not an indication of future results

  There are two methods of searching for traders to copy on eToro.

  The first and the simplest one is to follow the advice of eToro editors. The traders in the special menu at the top of the working space have been selected based on many criteria, such as risk to return ratio, markets, period of trading without serious slippages, etc. If you do not feel like you are ready to figure out the filters for selecting the traders, this option is the best for you.

  

  Past performance is not an indication of future results

  It is desirable that you have traders with different strategies and conservative risk criteria in your portfolio at first. You can see the performance, portfolio and the strategy of each trader by pressing on the profile picture.

  Let’s select the profile of a trader with the username knw500. After analyzing statistics you can see that the trader has been showing a high return rate in the period of two years and his maximum monthly drawdown was 9.98%. At that, the trader was assigned a low risk level – 3 points by eToro algorithm, and over 4,000 copiers. Based on the key criteria, he is a good candidate for copying.

  

  Past performance is not an indication of future results

  Read about how to use eToro’s filters for searching on your own in eToro Copy Trading Review.

  Find other managers on eToro using the same mechanism.

• 2

  Step 2.

  Starting to copy trades on eToro. It is very simple to add a trader to the list of the copied traders. All you need is to click Copy on the profile page.

  

  Past performance is not an indication of future results

  The system will offer you to select the key criteria – the amount you are allocating for copying and the risk value, when the copying stops. This is all done manually. We chose to stop copying if the copy value drops lower than 88%, and we allocated $250 for copying this trader.

  

  Past performance is not an indication of future results

  After that, we click Copy again. The trader will be automatically added to your Portfolio on the web platform.

• 3

  Step 3.

  Monitoring the results in the Portfolio. Trader knw500 has been added to our trial portfolio, which we created earlier. We received around 2% return in one week, which is not bad at all. However, for a more accurate assessment, at least 1-2 months are required. To receive more detailed statistics, you just click on the trader’s profile.

  

  Past performance is not an indication of future results

  Using the settings button opposite each trader, you can stop copying, change the amount for copying or set Stop Loss at any time.

  

  Past performance is not an indication of future results

  Of course, it is better not to allow the loss of more than 10-15% of the investment amount. It is like the professionals say – the key objective is to preserve capital, and then the profit will come.

Selection of the best strategy for copying trades on Forex depends on many criteria. Traders Union Experts note that the following needs to be taken into consideration when building a strategy:

• 1

  Assessment of risk to return ration.

• 2

  Risk diversification.

• 3

  Analysis of the results.

Below, we offer three strategies the traders can use.

• 1

  High-risk strategy with high return potential.

  This strategy implies selection of traders for your portfolio by their return indicator. For example, using a filter on eToro, you can find profiles of traders, who have shown over 100% return rate in the 12 months.

  

  Past performance is not an indication of future results

  Advice: The higher the return rate potential, the higher the risk. One should not focus exclusively on this criterion. Also, you shouldn’t allocate more than you are prepared to risk for this kind of copying trading strategy on eToro.

• 2

  Conservative strategy.

  This strategy implies search for traders with minimum risk criteria – this means that they haven’t had large drawdowns in the past 1-2 years and prefer not to perform many trades. Using eToro filter, you can set up risk criteria as you see fit. For example, we chose the conservative 2-3 points. The return potential with such traders will be lower, but the risk of loss will also be tremendously reduced.

  

  Past performance is not an indication of future results

• 3

  Mixed strategy.

  This strategy implies the use of the portfolio principle. An investor can allocate a bigger share of his capital to copy traders with conservative strategies, and the smaller share – to copy traders with risky strategies.