Copy Trading Forex Explained in Detail
- 3 years ago
The concept of copy trading has become more like a fad these days. Individuals are flocking to websites or platforms that allow them to participate in this activity.
But what exactly is copy trading? Let’s find out. If you are considering copy trading then I seriously
urge you to watch till the end for my personal honest opinion on copy trading.
Today I am going to answer all your question regarding what is copy trading in forex, the time required in copy trading, explain the benefits of copy trading in forex, what are the drawbacks of copy trading in forex.
So copy trading is an activity through which individuals can take the same trades as another individual or a trader. Just as the name suggests, the trades that are taken are a complete copy.
For instance, person A is a trader who has a strategy that he uses to trade the forex market and has been successful in capitalizing on price swings of currencies. Person B can take the exact same trades that person A takes through this concept of copy trading.
Platforms like Etoro, FXTM, ZuluTrade, IXsocial, etc, facilitate this activity of copy trading.
Copy-trading platforms charge small fees from the individuals. The trader then gets his share from the fee.
Copy-trading has both its benefits and drawbacks.
Let us look at the benefits first?
• Little to no experience is needed to participate in copy trading.
It doesn’t matter if the individual has little to no experience in trading or the financial markets, they just need to sign up on the copy trading platforms, subscribe to a trader’s strategy, and can begin trading.
• Can be used as a means to diversification
Not all individuals are able to trade in all of the markets that are there due to various reasons. Through copy trading, individuals can look to capitalize on those financial markets that they are not currently invested in or do not participate in at all.
The time required in copy trading.
The time required in copy trading is far less than you would require to trade on your own.
You don't have to do the technical analysis or news read and on some platforms, you don't even have to calculate the risk.
These were the three great benefits of copy trading but what about the drawbacks?
• Use of certain black hat techniques by traders
The copy trading platforms are more like a marketplace where individuals meet the traders with their strategies. More subscribers mean more money earned by the traders through subscription fees.
This leads to competition among traders to attract and lure more individuals to take up their service and they apply loads of marketing gimmicks.
Traders would look to cover up the shortcoming of their strategies and only display the positives.
• Conflict of interest
Since traders have to gain more followers or subscribers to earn more from the copy trading platform, their primary goal becomes to attract more subscribers.
But what exactly is copy trading? Let’s find out. If you are considering copy trading then I seriously
urge you to watch till the end for my personal honest opinion on copy trading.
Today I am going to answer all your question regarding what is copy trading in forex, the time required in copy trading, explain the benefits of copy trading in forex, what are the drawbacks of copy trading in forex.
So copy trading is an activity through which individuals can take the same trades as another individual or a trader. Just as the name suggests, the trades that are taken are a complete copy.
For instance, person A is a trader who has a strategy that he uses to trade the forex market and has been successful in capitalizing on price swings of currencies. Person B can take the exact same trades that person A takes through this concept of copy trading.
Platforms like Etoro, FXTM, ZuluTrade, IXsocial, etc, facilitate this activity of copy trading.
Copy-trading platforms charge small fees from the individuals. The trader then gets his share from the fee.
Copy-trading has both its benefits and drawbacks.
Let us look at the benefits first?
• Little to no experience is needed to participate in copy trading.
It doesn’t matter if the individual has little to no experience in trading or the financial markets, they just need to sign up on the copy trading platforms, subscribe to a trader’s strategy, and can begin trading.
• Can be used as a means to diversification
Not all individuals are able to trade in all of the markets that are there due to various reasons. Through copy trading, individuals can look to capitalize on those financial markets that they are not currently invested in or do not participate in at all.
The time required in copy trading.
The time required in copy trading is far less than you would require to trade on your own.
You don't have to do the technical analysis or news read and on some platforms, you don't even have to calculate the risk.
These were the three great benefits of copy trading but what about the drawbacks?
• Use of certain black hat techniques by traders
The copy trading platforms are more like a marketplace where individuals meet the traders with their strategies. More subscribers mean more money earned by the traders through subscription fees.
This leads to competition among traders to attract and lure more individuals to take up their service and they apply loads of marketing gimmicks.
Traders would look to cover up the shortcoming of their strategies and only display the positives.
• Conflict of interest
Since traders have to gain more followers or subscribers to earn more from the copy trading platform, their primary goal becomes to attract more subscribers.