To be successful in foreign exchange trading, traders need to devote energy and time to build up superior trading skills. However, with the development of technology, we can transform trading skills into intelligent trading systems, and investors can meet their trading needs only through social networks. "Copy trading" is an innovative foreign exchange trading model.
Copy trading, also known as copy trading or copy trading , is an investment strategy that automatically copies other traders' positions and trading operations. Investors do not even need to understand the relevant knowledge of the financial market. Such a mature and low-time investment has even gradually replaced traditional financial products.
This article will introduce how to copy trade, tips for making profits, and answers to frequently asked questions.
Copy trading allows investors to copy the positions held by the traders they follow. Investors only need to decide how much to invest, and they can automatically follow the operations performed by the trader. Both the positions held by the trader in the past ( which can be excluded ) and the operations to be performed in the future will be copied.
Investors do not need to look for investment targets, because copy trading relies on the trader's professional knowledge and operating model, which also means that investors will follow the profits and losses obtained by the trader.
1. Use the tools provided by the platform to find the traders you are interested in. For example, profitability, risk control level, number of followers or investment return rate , etc. are all key reference points.
2. Investment amount: Because you can follow different traders, traders with different attributes can flexibly use the investment amount. Some traders have high risk and high rewards, while others have low risk and low rewards. You can form your own profit-making method based on different amounts.
3. The platform will automatically copy all positions in the trading account or the positions selected by the investor.
4. Add funds / sort out the portfolio: If a trader you are following is making good profits, you can reduce the amount you follow a trader who is performing poorly, or inject funds again to increase investment in the profitable trader and flexibly maintain the diversification of the investment portfolio in your account.
Whether copy trading can make money depends largely on the trader that investors choose to follow. If they only follow a single trader, it will be crucial whether the trader has good trading discipline and a complete trading system. If the funds are spread across the entire investment portfolio, it will effectively help investors avoid the risks and ups and downs brought by the financial market, and allow for longer-term trading investments.
The copy trading model allows investors to pay attention to the operation methods of different traders. A successful trader should have professional knowledge and a successful trading system to attract investors' attention. Investors can learn from the entry and exit of successful traders.
Although there are some strong traders who provide copy trading models, when the trader is in a bad state or in special market conditions, the performance will be unstable. In fact, all copy trading cannot guarantee profits, because no trader has a 100% winning rate . In the long run, the trader's continued profitability will always be questionable, because even the performance of smart trading will fail. Once there is a sudden change in the market, such as a black swan event, some traders or systems will suffer heavy losses, and past profits may not even be compensated.
If you encounter some traders who have no real ability but only provide copy trading services for some profit needs, those followers who do not try to think independently will suffer in the end.
Therefore, copy trading is only a way for investors to spread their risks, or a reference for entry and exit, or even a tool to remind them of the market. When it comes to trading, investors still need to judge the market and establish positions on their own. Even if there are no relevant tools, they will not be at a loss.
1. Is the investment risk of copy trading lower?
The risk of copying / trading will not be reduced, because traders are making an investment, and the nature of investment itself has certain risks and rewards. Like any investment in the financial market, copy trading will expose investors' funds to risks. No investment is a sure win, not to mention that this investment is following the trader's decision rather than making it on your own.
2. How do I choose the traders I want to follow?
It may take some time to choose a successful trader to copy and follow. Not only does it require long-term observation by investors, but it is also necessary to find a trader whose risk tolerance matches your own. Furthermore, if you want to form an investment portfolio of multiple traders, the direction and time required for investors to evaluate will be more.
If the positions held by the followed traders lack trading liquidity, not only will the holding time be increased, but there will also be the risk of difficulty in closing the positions. Investors also need to pay more attention.
Further reading: Forex program trading: EA trading program usage tutorial, advantages and disadvantages analysis
All financial products traded on margin carry a high degree of risk to your capital. They are not suited to all investors and you can lose more than your initial deposit. Please ensure that you fully understand the risks involved, and seek independent advice if necessary.