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.
Traders Union experts answer the question: Is copy trading profitable? How you can earn money on copy trading:
choose a reliable copy trading platform;
select traders to copy;
diversify your portfolio;
set risk parameters;
monitor and adjust;
educate yourself;
invest only what you can afford to lose.
This type of investment is also attractive as it is quite affordable to enter the market. There are, however, drawbacks as well. Traders Union offers to look into the basics of copy trading on Forex and learn the main steps from selecting a suitable platform to starting to copy trades.
What the difference between conventional trading and copy trading
First of all, let’s determine how copy trading differs from conventional trading. The key difference is that trading implies active involvement in the process of performing trades. The trader selects the asset to trade, analyzes, opens positions, Stop Loss and Take Profit. Professional trading is essentially a business of making money from the change in prices of assets. Just like businessmen, traders often dedicate all their working time to this, bear all risks and gain benefits.
Copy trading is essentially copying the trades of professional traders using the features of special platforms. This type of investment first appeared slightly over a decade ago thanks to active development of online trading and social media technologies.
Copy trading platforms unite traders – managers and novice traders, who act as subscribers and investors. Upon subscription, all trades executed by the manager are copied to a specific part of the investor’s capital either automatically or semi-automatically.
Pros and cons of Forex copy trading
The advantages of copying traders on Forex are quite evident for the beginners. Without having special skills and experience, they gain an opportunity to earn as much as the professionals, who have dedicated some years to this work.
In addition, modern copy trading platforms are easy to use and, at the same time, are multifunctional. They allow for flexible regulation of capital distribution among different traders and strategies, setting risk management criteria, using numerous filters for performance analysis.
The biggest drawback comes from the very nature of financial markets – high profitability of the managers in the past does not guarantee the same results in the future. Few strategies show the same positive result at any behavior of the market.
👍 Pros
Functional and easy to use platforms
Low entry threshold
Possibility to learn by watching the actions of the professionals
👎 Cons
High profitability of the managers in the past does not guarantee the same outcome in the future
Best copy trading platforms in 2024
Traders Union experts have compiled a rating of the top copy trading platforms in 2023. The rating includes the brokers that offer the Forex copy trading service on their proprietary platforms or platforms of third-party providers.
The experts used clear criteria when compiling the rating:
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1
Broker’s reliability.
The broker’s operations must be supported by the licenses of top regulators.
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2
Platform functionality and popularity.
The more traders there are on the platform, the more flexible settings it allows to make, the higher its rating is.
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3
Broker’s trading conditions.
The size of the commissions plays the key role, as they can literally ‘eliminate’ a large share of the profit. In addition, the more markets and trading instruments a broker offers for copy trading, the better.
Why it worth to consider forex copy trading
As you may have seen, a beginner can cope with the task of choosing a trader and starting to copy quite easily. The majority of other forex copy trading platforms from among the top have a similar set of functions and you can figure it out.
However, one should keep in mind that forex copy trading, just like any other type of investment, carries the risk of losing money. We do not recommend investing in copy trading an amount higher than the one you are willing to risk. It is true that you may end up getting a return at the level of a professional trader, but the losses are also possible, as the market is often unpredictable
The smart decision would be to test the system using the demo account. If it works out, you can turn on copying in a wider portfolio of passive investments.
Best Social Trading platform providers for brokers
We also offer you to consider the top copy trading platform providers on Forex. The brokers that offer this service can be divided into two categories. The first one includes the brokers who offer traders their proprietary platforms. These are FXTM, RoboForex, InstaForex, Forex4You.
However, a lot of top brokers offer the services of copy trading platform providers. We have compiled a rating of the most popular and advanced providers in 2023.
Best Social Trading platform providers
| Copy Trading Platform Provider | Developer | Platform compatibility | Minimum deposit | Brokers that use it |
|---|---|---|---|---|
| MQL5 | MetaQuotes | MT4, MT5 | $0 | AvaTrade, XM, IC Markets, Pepperstone, WForex, HotForex, |
| ZuluTrade | ZuluTrade | ZuluTrade, MT4, MT5 | $300 | AvaTrade, IC Markets, FxOpen, Weltrade, Think Markets |
| MyFxBook Autotrade | MyFxBook Ltd | MT4 | $1000 | Tickmill, IC Markets, FxOpen, AxiTrader, Pepperstone, FP Markets, Fusion Markets |
| DupliTrade | DupliTrade Limited | DupliTrade, MT4 | $5000 | AvaTrade, Fusion Markets |
Нow to start earn money by copying trades
You can follow this algorithm of actions:
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1
Having studied our reviews, find a suitable broker and platform for copy trading.
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2
Review all important conditions of work.
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3
Test the platform using a demo account.
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4
Find several traders to copy.
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5
If it works, fund the account for a small amount at first.
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6
Control the risks and make changes to the composition of your social investment portfolio from time to time.
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7
If you have a good return for a long period of time – over a year, then you can consider increasing your investment limit.
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.
Summary
Copy trading is one of the most popular ways of earning passive income on Forex for the 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.
Expert review
Investor Reviews
I’ve been investing in copy trading on FXTM for three months. In the first month, the result was excellent – over 15% of return, the second month – +2%, and in the third month the portfolio registered a loss, because one of the traders had a big loss. I recommend setting the Stop Copying value strictly, because the total result may slip due to a mistake of one person.
Scott Palmer, 25
Beginner Investor
New York, US
I tried several copy trading platforms. In my opinion, MQL is very weak; ZuluTrade is a good platform. I can’t complain about the results – you can realistically earn your 20-30% return. It’s not too much, but the banks don’t even give 2% these days.
Gina Lee, 65
Retired
London UK
I got interested in copy trading five years ago. It turned out that active trading is not my department – it takes too much time and the results are worse than in simply copying trades.
Roberto Motti, 26
Investor
Milan, Italy
FAQ
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 the 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.
Antony Robertson, Traders Union Financial Analyst
«Copy trading is excellent for the novice traders, who want to earn money in the financial markets, but are not prepared to trade on their own for different reasons. Moreover, I can confidently say that independent trading is ill-advised for the majority of people. After all, it requires a large amount of knowledge and practical experience.
In this context, to try to copy trades of experienced traders, who already went through the learning process and show good results is a wise decision, especially since the initial expenses are not high at all.
However, you need to stay realistic and remember that all types of investment involve risks. Even experienced traders make mistakes sometimes. I would recommend diversifying the portfolio and avoid investing too much money in one trader».