How to Make Money On Copy Trading?

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How to earn money on copy trading:

Step 1. Choose a reliable broker and platform
Step 2. Understand the conditions
Step 3. Test on a demo account
Step 4. Select traders to copy
Step 5. Start with a small investment
Step 6. Manage risks
Step 7. Monitor and adjust

Copy trading has been one of the most popular ways to earn passive income in the financial market in recent years. By using special platforms and the features that allow them to copy experienced traders, the beginners can potentially earn as much as the professionals.

This type of investment is also attractive as it is quite affordable to enter the market. There are, however, drawbacks as well. In this article, we will look into the basics of copy trading on Forex and learn the main steps from selecting a suitable platform to starting to copy trades.

Нow to start earn money by copying trades

You can follow these steps to start earning from copy trading effectively and with minimized risks:

Choose a reliable broker and platform

Start by researching reviews and comparing brokers that support copy trading. Look for platforms with a proven track record, transparent fee structures, and user-friendly interfaces. Popular brokers often offer features like detailed trader analytics and risk management tools.

We have compiled a rating of the top copy trading platforms in 2024. The rating includes the brokers that offer the Forex copy trading service on their proprietary platforms or platforms of third-party providers.

Best copy trading platforms
	Min. deposit, $	Max. leverage	Investor protection	Max. Regulation Level	Open an account
Pepperstone		1:500	£85,000 €20,000 €100,000 (DE)	Tier-1	Open an account Your capital is at risk.
OANDA		1:200	£85,000 SGD 75,000 $500,000	Tier-1	Open an account Your capital is at risk.
FOREX.com	100	1:50	£85,000	Tier-1	Study review
IG Markets	1	1:200	£85,000 €100,000 SGD 75,000	Tier-1	Study review
Thinkorswim	2000	1:100	$500,000	Tier-1	Study review

Understand the conditions

Review all the key terms of the platform, such as minimum deposit requirements, available assets, fees, withdrawal policies, and trading conditions. Ensure the platform aligns with your financial goals and risk tolerance.

Test on a demo account

Before committing real money, use a demo account to familiarize yourself with the platform and copy trading process. Experiment with selecting traders, allocating funds, and monitoring performance to gain confidence.

Select traders to copy

Use the platform’s analytics to find traders with consistent performance. Evaluate their historical returns, drawdowns, risk levels, and trading strategies. Diversify by choosing several traders with different approaches and asset focuses.

Start with a small investment

Once you’ve tested the platform and identified traders to copy, fund your account with a small amount of capital. This reduces the risk while you continue learning and evaluating your portfolio's performance.

Monitor and adjust

Copy trading isn’t entirely passive. Regularly review the performance of the traders in your portfolio. If a trader's performance declines or no longer fits your goals, replace them with a better option.

Manage risks

Use platform features like stop-loss orders, trade size limits, and diversification across multiple traders and asset classes to protect your investment. Avoid over-allocating funds to a single trader or high-risk strategies.

What is the difference between conventional trading and copy trading

Conventional trading involves active participation, where traders select assets, analyze markets, execute trades, and manage risks independently. It demands deep expertise, time commitment, and full control over decision-making.

Copy trading simplifies this process by allowing investors to replicate the trades of experienced professionals via specialized platforms. It requires minimal involvement, making it accessible for beginners and part-time traders.

These platforms connect professional traders (managers) with investors (subscribers), enabling real-time trade copying. Investors can diversify by following multiple traders and customize risk settings, while managers earn commissions or profit shares.

Key differences
Aspect	Conventional Trading	Copy Trading
Engagement	Requires active participation in all steps	Passive involvement, trades are replicated
Skill Requirement	High, requires expertise in analysis and strategy	Low, relies on professional traders’ expertise
Time Commitment	Significant, often full-time	Minimal, platforms handle trade replication
Risk Management	Fully controlled by the trader	Delegated to the selected professional trader
Autonomy	Complete control over every decision	Limited control, follows the chosen trader’s moves

While copy trading is easier to enter, risks remain, as past performance doesn’t guarantee future results. Always diversify and set realistic expectations.

Pros and cons of Forex copy trading

Beginner-friendly. Allows novice traders to participate in the market by leveraging the expertise of experienced traders.
Time-saving. Minimal effort required as trades are automatically copied, making it ideal for those with limited time.
Learning opportunity. Helps new traders observe and learn from successful traders' techniques.
Risk management tools. Most platforms include features like stop-loss limits and trade size adjustments to manage risks.
Low entry barrier. Many platforms allow you to start with a small investment.

Performance variability. Past success of a trader doesn't guarantee future performance, making returns unpredictable.
Risk of over-reliance. Blindly copying trades without understanding the strategy can lead to losses.
Fees and commissions. Some platforms charge high fees, which can reduce profitability.
Limited control. You depend on the decisions of the trader you copy, reducing your autonomy.
Scams or inexperienced traders. Some platforms lack transparency, exposing you to fraudulent or unqualified traders.

Can I lose money in Forex copy trading

Yes, just like with any investment, you can lose money on copy trading. By applying strict criteria of risk management and thoroughly selecting the copied traders, you are reducing the risks.

However, you won’t be able to avoid risks altogether. Even the most advanced hedge funds in the world suffer losses sometimes. This factor must be taken into account, and you should not invest an amount higher than the one you are prepared to risk.

Risk and warnings

Copy trading, while offering a convenient way to enter financial markets, is not without risks. It is essential for investors to understand these risks before getting started to make informed decisions:

Market volatility. Financial markets are inherently volatile. Even the most experienced traders can experience losses during unexpected market conditions. Copying their trades does not eliminate this risk.
Past performance is not a guarantee. The historical success of a trader does not guarantee future profitability. Market conditions, strategies, or personal circumstances can change, impacting their performance.
Dependence on selected traders. Copy trading relies heavily on the skill and consistency of the chosen signal provider. If they underperform, it directly affects the investor's portfolio.
Platform reliability. The functionality and stability of the copy trading platform are crucial. Any technical issues, such as delays or execution errors, can lead to financial losses.

How to avoid risks

Diversify your portfolio. Copy multiple traders with varying strategies to reduce dependency on one.
Set risk parameters. Use tools like maximum drawdown limits to control potential losses.
Monitor regularly. Keep track of your investments and switch traders if performance declines.
Start small. Begin with a small investment to test the platform and chosen traders before committing larger amounts.
Educate yourself. Understand how the platform and markets work to make informed decisions.

Pick smart traders and balance risks

Copy trading isn’t just about following popular traders. Look at how they manage risks, adjust strategies, and handle unpredictable market conditions. Instead of only tracking top-ranked traders, pick those who show real market knowledge by staying consistent even during tough times. This helps reduce your chances of losses from traders relying solely on high-risk trades.

To earn better returns, balance your copied trades by following traders with different trading strengths. For example, combine a short-term scalper with a long-term investor to spread risks and capture varied market moves. Step in when needed to secure your gains if market trends shift rapidly. This approach helps build a dynamic portfolio that can handle market surprises effectively.

Summary

Copy trading is one of the most popular ways of earning passive income on Forex for novice traders. Low entry threshold and functionality of the platforms will make your entry to the market comparatively easy. Also, the potential of profitability at the level of experienced traders certainly attracts many people.

However, just like with any investment, you need to prepare yourself that there won’t be an instant result. There are also financial risks. If you are ready for that, this area of investment is certainly worth trying.

FAQs

How much money can I earn on copy trading?

The return rate depends on a multitude of factors, primarily how successful the managers you choose will be and how the market situation will develop. However, you should keep in mind that nobody can guarantee you a positive financial result.

What is the best amount to start copying trades with?

It is best to start testing a copy trading platform by using a demo account. If the result is stable, you can switch to a live account. A lot depends on the income you can spare – it is advisable to invest the amount you can afford to risk.

Is copy trading legal?

Copy trading is a legal way to invest in most countries in the world.

Which brokers offer the copy trading service?

The top brokers in terms of copy trading are FXTM, AvaTrade. You can see the full rating of the copy trading platforms in the article on our portal.

Team that worked on the article

Rinat Gismatullin is an entrepreneur and a business expert with 9 years of experience in trading. He focuses on long-term investing, but also uses intraday trading. He is a private consultant on investing in digital assets and personal finance. Rinat holds two degrees in Economy and Linguistics.

Learn about our editorial policies

Chinmay Soni is a financial analyst with more than 5 years of experience in working with stocks, Forex, derivatives, and other assets. As a founder of a boutique research firm and an active researcher, he covers various industries and fields, providing insights backed by statistical data. He is also an educator in the field of finance and technology.

As an author for Traders Union, he contributes his deep analytical insights on various topics, taking into account various aspects.

Mirjan Hipolito is a journalist and news editor at Traders Union. She is an expert crypto writer with five years of experience in the financial markets. Her specialties are daily market news, price predictions, and Initial Coin Offerings (ICO).

Diversification

Diversification is an investment strategy that involves spreading investments across different asset classes, industries, and geographic regions to reduce overall risk.

Leverage

Forex leverage is a tool enabling traders to control larger positions with a relatively small amount of capital, amplifying potential profits and losses based on the chosen leverage ratio.

Risk Management

Risk management is a risk management model that involves controlling potential losses while maximizing profits. The main risk management tools are stop loss, take profit, calculation of position volume taking into account leverage and pip value.

Volatility

Volatility refers to the degree of variation or fluctuation in the price or value of a financial asset, such as stocks, bonds, or cryptocurrencies, over a period of time. Higher volatility indicates that an asset's price is experiencing more significant and rapid price swings, while lower volatility suggests relatively stable and gradual price movements.

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Day trading involves buying and selling financial assets within the same trading day, with the goal of profiting from short-term price fluctuations, and positions are typically not held overnight.