8 Best Copy Trading Platforms - Copy Trade Software for 2024

Useful Forex Facts & Insights

Top 3 Brokers With the Tightest Spreads

The spread size is crucial for active trading styles and bot trading. STP/ECN brokers typically offer the lowest spreads for EUR/USD, with an average spread of around 0.1 pips. Additionally, these brokers usually charge a small commission per standard lot, ranging from $1.5 to $3.5. Traders Union prepared a list of the top 3 brokers in your country with the lowest spread for the EUR/USD and GBP/USD currency pairs.

What Is A Copy Trading?

Copy trading is a form of social trading that is becoming increasingly popular. This method is primarily designed for novice traders and investors, allowing them to automatically or manually copy the trades of more experienced traders in Forex and other financial markets.

Copy trading platforms offer users the ability to subscribe to traders and start copying their trades, using either a portion or all of their capital. Each time the copied trader opens a position or sets Stop Loss and Take Profit orders, these actions are automatically executed on the copier's account. Some platforms also allow for the creation of a portfolio from different signal providers.

On most platforms, copiers can unsubscribe from a trader at any time and start trading independently or subscribe to a different manager.

Copy trading offers a convenient way for novice traders to enter the financial markets and potentially earn profits by following the trades of more experienced traders. However, it is important to be aware of the risks involved and to carefully choose the traders to copy.

How To Start Copy Trades?

Selecting a Broker for Copy Trading

When choosing a broker for copy trading, prioritize two key aspects:

• Regulation and Trading Conditions: Look for brokers with tier-1 regulation, ensuring a secure trading environment. Additionally, compare their trading conditions, focusing on those that favor copy trading activities.

• Copy Trading Fees: While some platforms like eToro offer free copy trading, most charge fees. These fees, typically ranging from 10% to 50%, are deducted from the profits generated by the trades you copy.

Other Copy Trading Factors to Consider

Choosing the Right Trader to Copy

Selecting a trader to copy from requires careful consideration. Prioritize those with a long and consistent track record of successful trading, avoiding significant drawdowns (periods of substantial losses). Stability is key; don't be lured by traders showcasing exceptionally high, but likely short-term, profits.

Beyond Copy Trading Fees: Additional Costs

Remember, profitability isn't the sole factor. Consider the broker's spread (difference between buy and sell prices) and any commissions that might eat into your returns, even if the trader you're copying shows consistent profits.

Managing Risk in Copy Trading

Most copy trading platforms offer risk management tools. These tools allow you to automatically stop copying a trader's positions if they reach a predefined loss level. Additionally, consider diversifying your risk by copying multiple successful traders simultaneously. This helps spread your risk and reduces dependence on any single trader's performance.

Stay Vigilant: Monitor Performance

Don't set your copy trading strategy and forget it. Regularly monitor the performance of the traders you're copying. This allows you to identify any changes in their strategy or performance that might necessitate adjustments to your copy trading activity.

Is Copy Trading Legal?

Copy trading is the practice of using automated software to replicate or copy investment decisions made by experienced traders or investors. In recent years, it has become increasingly popular due to its convenience and success in yielding results. When it comes to legality, copy trading is legal in the US, UK, and most other countries.

The regulations governing this activity may differ slightly between nations but typically focus on ensuring that investors understand the risks involved with this type of trading. Ultimately, however, there are no current bans or restrictions around using copy trading applications. As long as all regulations are followed, investors can easily enjoy its advantages.

Can I Make Money With Copy Trading?

Yes, it's certainly possible to make money through copy trading on the foreign exchange market. However, to see success, you'll need to do some research and take certain steps for yourself. To start, choose experienced traders with successful trading habits that suit your own risk preferences and financial objectives.

A good trader should demonstrate stable results without significant intra-month drawdowns for at least 1 year. A longer track record is even better. The maximum drawdown should ideally not exceed 7-10% of the capital or 10-15% of the trade amount. If a trader's profitability fluctuates widely, it's a bad sign - it means they are not managing risk properly, and there is a high risk of losing the entire capital.

Diversification is an important risk management strategy that can help reduce the impact of poor performance by any signal provider. By copying multiple signal providers, an investor can spread the risk and improve the chances of generating a positive return.

Is Copy Trading a Good Idea for Beginners?

Copy trading is an excellent way for novice traders to start out in the market without having to put in a substantial investment of both time and money. It allows beginner traders to observe and copy more experienced traders and learn from their strategies, tactics, and expertise. Here are several reasons why copy trading can be great for beginners.

How Much Money Do I Need for Copy Trading?

The amount of money you need for copy trading can vary depending on the platform you use and the strategy you choose to follow. Some platforms have minimum deposit requirements, which can range from a few dollars to several thousand dollars.

In general, it's a good idea to have at least $100-$400 to use for copy trading, as this will allow for some degree of diversification and reduce the risk of putting all your eggs in one basket. However, you can start with as little as $10 on some platforms.

It's important to keep in mind that copy trading involves risks, just like any other type of investment. While it can be a good way to potentially earn returns without having to research and analyze the markets yourself, it's important to carefully consider the risks and to only invest money that you can afford to lose.