Copy trading is the practice of duplicating the positions of another trader using social platforms, automated tools, and signals. Copy trading is popular among forex traders and is utilized extensively on third-party platforms such as MetaTrader 4. We will discuss the definition of copy trading as well as its key characteristics. We will also look at the pros and cons and make a list of the best copy trading platforms on the market.
Copy Trading Brokers in South Africa
Quotex
Deriv
Exness
IQ Option
Hycm
Easy Markets
There is a vast selection of copycat trading brokers that provide proprietary and third-party copy trading platforms. Some brokers and exchanges for cryptocurrencies, like Coinbase and Binance, are starting to offer their own social and copy trading tools.
We have compiled a list of the top brokers that offer copy trading support. Always do your own research to figure out what choice is best for you.
What exactly is copy trading?
Copy trading enables individuals to automatically or manually copy the opened and closed positions of another trader. Traders send signals about their positions through a social network or forum so that others can copy their strategies.
The definition of copy trading is closely related to that of mirror trading. However, copy trading differs from mirror trading in that traders blindly copy trades rather than replicating top strategies.
Copying positions is possible on numerous markets, including forex, stocks, options, and CFDs. You can also copy trades on popular cryptocurrencies like Bitcoin (BTC) and major precious metals like gold and platinum.
How is copy trading implemented?
Trading enables you to link a portion of your portfolio to someone else’s, with all opened trades and future actions copied to your account. A trader, for example, could emulate a long-term stock market investor.
Followers must decide how much to invest and have the option to invest more or less depending on the trader’s performance.Trading can be risky, though, so traders should always do their own research and understand how it works before putting money into it.
Despite the fact that some platforms may give you some control over your funds, others may operate on a fixed system. A fixed system will allow you to stop copying a trader, but you are unlikely to have much control in other areas.
Copy Trading Platforms
Depending on the broker, copy trading may be provided via proprietary software or third-party platforms, such as those listed below. Some brokers also offer extra tools for research and places to meet other people, like TradingView and Telegram.
Copy Trades Utilizing MetaTrader 4
MT4 has been designed so that you can replicate the trades and strategies of profitable traders. Choose the Signals tab within the platform to gain access to more than 3,200 free and paid forex signals from leading providers. Traders are ranked according to their results, making it simple to select a provider and specify your parameters. Then, you can begin copying trades in both live and demo environments.
MetaTrader 5 is used to copy trades.
Similar to MT4, MT5 allows you to automatically replicate the trades of others. Masters and followers need not be registered with the same broker; the MT5 platform links traders across continents and brokerages. In the MT5 market place, subscription costs are set, and fast data exchanges help cut down on delays in execution.
Copy Trading Utilizing cTrader
Another well-liked platform is the cTrader solution. Once a client has opened an account, they can navigate to the Copy section to review available strategies and compare the providers’ past performance, risk appetite, and fees. Clients choose how much money they want to put into copying a certain trader, and they are free to copy more than one provider at the same time.
DupliTrade for Duplicate Trading
DupliTrade offers the most advanced technology for automated copy trading. Users have the option to select the proportion of trades they wish to replicate, as well as the ability to scale up or down. Users can copy trades in the foreign exchange, stock, index, and commodity markets. Those who want to sell their trades have to go through a strict auditing process, and clients are given all the information they need to make an informed choice.
Copy Trading Compared to Social Trading
Social trading places a greater emphasis on gaining ideas and insights from various websites and services in order to develop new strategies, share advice, and invest in tools. Copy trading is primarily concerned with duplicating trades and profiting solely from the results.
Before committing to copy trading, novice or new traders may want to begin with social trading to better understand market behaviors and trends. For instance, companies such as Liteforex, for instance, provide comprehensive networking tools that provide valuable exposure to intricate strategies and market research.
Trading Copies of Cryptocurrency
Cryptocurrencies are a relatively recent addition to the financial markets, and they offer volatility and profit potential. Numerous providers are rushing to offer copy trading on the most popular cryptocurrencies, including Bitcoin, Ethereum, and Litecoin. Similar to copying forex positions, users can mirror trades on crypto-only pairs as well as crypto-and fiat-based pairs.
Leading providers, including eToro, offer copy trading on cryptocurrencies, in addition to specialized crypto platforms, such as Coinmatics and 3Commas. The latter two provide cryptocopy trading robots that execute market positions in real-time and with intelligence. A user-friendly dashboard allows clients to monitor their investments.
Trading App Copy
One of the advantages of copy trading is that you delegate the heavy lifting and market analysis to others. As a result, managing your copy account and tracking results from your mobile device is quick and simple.
MetaTrader 4, MetaTrader 5, eToro, and numerous other prominent providers offer iOS and APK mobile apps for download. Clients can quickly compare traders, think about strategies, fund their accounts, and copy trades after installation.
Imitate the trading system
It is essential to consider how your trading strategy aligns with those of the providers you wish to imitate. This will make sure, for example, that there isn’t a big difference in how willing people are to take risks.
Important aspects of strategy include:
Risk-Quantify your risk appetite; how much market volatility are you willing to tolerate, and what alerts and tools will you use to manage your risk?
Which financial markets do you intend to invest in? Popular markets include Forex, stocks, indices, commodities, and cryptocurrencies. It is essential to comprehend the market you intend to invest in.
How much control do you want over your capital, fixed or variable? Fixed and fully-automated copy systems enable you to mirror trades with minimal input or control. Those desiring more influence and command may choose a more open and adaptable system.
Research: There is a risk with copy trading that clients will not conduct adequate research prior to investing large sums of money. Not only is it important to research providers carefully before signing up, but it’s also important to keep an eye on how your trades are going once your money is at risk.
Leverage: Leveraged copy trading allows you to increase the size of your positions with a small initial investment. This indicates that by mirroring the trades of multiple providers, you can increase your profit potential and diversify your portfolio. Rates of leverage vary by country. Providers who are regulated by CySEC, for example, can’t offer leverage greater than 1:30.
Copy Trading Signals.
As the term suggests, signals are indicators that market participants can use to take a position. After receiving a signal, you can modify your settings and trading parameters in accordance with your trading strategy. Signals typically offer greater flexibility than copy trading that is fixed or automated. You may want to change your trade size, stop loss, and take profit levels before you make a trade.
MetaTrader 4 and MetaTrader 5 are two of the most popular signal providers. Tens of thousands of top traders offer free and paid alerts through these platforms.
The Advantages of Copy Trading
One of the main advantages is the convenience of having someone else do the work, so you do not need to be a copy trader guru or expert to participate. It is also ideal for traders who lack the time to engage in full-time day trading.
Some brokers provide demo trading accounts, which are ideal for new traders who wish to explore the platforms beforehand. Demo accounts are free, risk-free, and frequently offer access to useful research tools.
Authorized practice: copy trading is generally acknowledged by major regulatory frameworks, such as CySEC, ESMA, MiFID, and the FCA. If you choose a licensed broker with a good name, your money will be safe and protected from fraud.
Diversification of portfolios – Traders can gain exposure to opportunities or trends that they would not normally consider without the assistance of another trader’s expertise.
The Drawbacks of Copy Trading
Risk: Even if you copy an experienced trader, the risks can be high. If a strategy fails, the risk will also be transferred to the account of a follower, which can result in a financial loss.
One of the primary disadvantages is the lack of control a trader will experience once they begin copying an account; they are essentially entrusting their portfolio to a stranger.
Depending on the broker, copy trading may be subject to fees. For instance, OctaFX clients pay a’master’ commission that is individually specified and charged in USD per lot of volume traded. A minimum deposit amount will also be required to invest in a trader. At eToro, the minimum deposit amount is $200.
The Dodd-Frank Act put limits on lenders to protect US consumers from unfair lending practices. As a result, most US residents can’t copy trade.
Instructions For Opening A Copy Trading Account
To open a copy trading account, you must register for a live account with the broker of your choice. Check your broker’s regulatory status ahead of time. This will tell you how safe and secure your funds will be.
Traders must deposit funds into their accounts to invest in other accounts. Upon receiving your login credentials, you may need to link your copy investing system to your live account, depending on your platform. Typically, the broker will provide a guide on how to accomplish this.
After setting up your accounts, you can begin copying trades. We recommend using any video tutorial guides beforehand; for instance, some brokers provide YouTube videos that are simple to follow. The eToro copy trader guide also tells you how to set up and use risk-management tools like Copy Stop-Loss (CSL).
Imitate trading review
Use this table with reviews of the leading copy trading brokers to compare all of the reviewed copy trading platforms. Note that some of these markets may not accept foreign traders. If we are able to determine that a broker would not accept your location, it will be highlighted in gray in the table.
Transmitted Trading History
Internet trading platforms have greatly simplified copy trading, but the concept predates the internet. Previously, you could subscribe to trading signals via phone and postal mail. These services were frequently costly and, as a rule, constituted cons that offered little value to investors. Typically, the services were advertised in common newspapers to reach less sophisticated investors. You were required to conduct the suggested transactions yourself after receiving the signal. Postal signals were typically several days old by the time they reached the subscriber.
Early Internet commerce
The origins of online copy trading can be traced back to subscriber newsletters and IRQ chat rooms. Individual traders communicated their trades by writing about them in the chat room or by sending their subscribers a newsletter. Eventually, traders began to utilize private forums in the same manner. Investors who wished to replicate these trades were required to read the announcement immediately and then manually execute the trade. Those who did not visit the chat room or read the newsletter did not receive any notifications. Copying the trades requires the copying trader to exert effort. The majority of these newsletters, chat rooms, and forums require a monthly subscription fee to gain access to the posted information. Traders could frequently comment on the trade and pose questions to the individuals who they copied.
The fact that all trades had to be executed manually created a substantial entry barrier for traders who desired to use these services. There was no such thing as a passive copy trader. If you wanted to copy another trader, you had to keep an eye on the trades they shared and do the transactions yourself.
Computerized trading
Some traders realized that advancements in internet technology presented an opportunity to enhance this type of trading by developing software for the automatic replication of online trades. Around the middle of the 2000s, the first copy trading solutions that were fully automated were put on the market.
Mirror Trader is an example of one of the first automatic trading systems for copy trading. Tradency introduced Mirror Trader in 2005. Mirror trader enables users to connect their own trading accounts to the software to fully automate trading.
Mirror Trader also permitted traders to host their own trading strategy on the platform, allowing other users to copy trades generated by that strategy. Mirror Trading recorded and displayed each trading strategy’s trading history. Traders were thus able to make an informed decision before deciding to mirror another trader’s strategy. This made Mirror Trader by Tradency a much safer option than many other services that showed their own trading history, which was often fake.
mainstream acceptance
Copy-trading has become an increasingly popular service, and numerous online trading platforms and brokers have incorporated copy-trading capabilities. After 2010, the majority of them added this feature. Since then, some brokers have discontinued these services. FXPro is an illustration of this. In 2017, they discontinued the Supertrader feature.
Copy-trading has historically been most prevalent in the Forex market, but regulatory bodies have enacted stricter rules, resulting in a decline in popularity. Simultaneously, copy-trading has gained popularity among stock traders and other types of traders as well. Etoro has significantly contributed to copy trading’s current prominence. In 2012, they debuted and trademarked their copy trading system. Copy trader now offers the option to copy more than 135 000 different traders.
Last Word
Copy trading can be an excellent method for novices to gain exposure to the markets and generate profits with minimal effort. In addition, it enables traders to observe the successes and failures of trading through the actions of others. Copy trading does not work for everyone, despite the fact that there are success stories associated with it.
FAQ
Is copy trading authorized?
Copy trading is a legitimate system offered by numerous licensed brokers and acknowledged by a number of regulatory bodies. Traders should consider a reputable brand to increase the security of their funds. Utilize our list of the top copy trading platforms for secure trading.
Is copy trading effective?
Whether trading platform is beneficial or detrimental to you will depend on a number of factors. Copy trading is a useful tool for novice traders or those who lack the time to monitor the markets themselves. However, copy trading does not typically give you a great deal of control and can be risky if the trader’s strategy fails.
Where can copy trading be done?
trading online is popular in many places, like the UK and Europe, Canada, Latin America, and many Asian and African countries, like Hong Kong, Indonesia, Malaysia, the Philippines, Kenya, and South Africa.
What is the best platform for copy trading ?
According to numerous online reviews, the award-winning brokerage eToro is a favorite among traders for social and copy trading. AvaTrade and Pepperstone are also good options for those who wish to use popular third-party platforms.
Use our top list of copy trading brokers to compare all copy trading-capable platforms.
Is copy trading halal?
Some brokers provide Sharia-compliant Islamic (swap-free) live accounts. Contact your broker to determine whether online trading is supported on your account.
Is copy trading legal in Singapore?
Yes, so long as your chosen broker accepts Singaporean clients.
Is the practice of copy trading legal in South Africa?
Yes, but check with your broker for any country-specific restrictions that may apply.
Is copy trading legal in India?
Due to local laws, copying may be prohibited. Contact your broker for additional information.