Copy Trading Explained: How It Works + Pros & Cons Revealed!

Copy Trading has become a hot topic in the Forex market. It is one of the most overrated term you may hear nowadays — but do you actually know what copy trading is, how it works, and what its advantages and disadvantages are? This article answers all these questions. Check out the article below and befriend with Copy Trading!

What Is Copy Trading in Forex?

Copy trading is a type of forex trading where investors do not analyze the market themselves but imitate the trades of experienced and professional traders. It allows you to earn profits from their skill and knowledge. It's like putting your trading on autopilot mode.

How Does Copy Trading Work?

1. Find a Copy Trading Platform:

To set up copy trading, first you need to search for and sign up with a broker or platform that offers copy trading. There are many brokers and platforms that offer this service.

2. Pick a Trader to Imitate:

Now it's time to browse a list of verified traders and select one according to your preference.

3. Allocate Funds:

The next step is to decide how much money you want to invest with that particular platform. Decide and assign funds. If you are a newbie, do not invest a hefty amount. Start with a minimum investment.

4. Copy Trading Begins:

All set! Copy trading will now begin. Whenever the trader makes a move, the same trade is executed in your account — proportionally to your investment.

5. Track Your Performance:

Congratulations! You have completed all the steps. Now, all you have to do is evaluate your performance. You are also free to stop copying at any time, switch traders, or adjust your risk settings.

Advantages & Disadvantages

Following are the Pros and Cons of Copy Trading

Conclusion

Copy trading can be a great entry point into forex for beginners or those short on time — but its not risk-free or guaranteed for the long term. Since you are now aware of the pros and cons of copy trading, you need to be careful. Always research traders carefully and invest only what you can afford to lose.