What is copy trading, how does it work, and why it’s a great tool for traders.

Copy trading is a well-known trading tactic and one that is being used by millions around the world. Copy trading is an excellent and innovative tool to help traders learn from the best, whether you are a beginner who only recently started trading or you are more skilled and knowledgeable.

What is copy trading and how does it work?

Copy trading means what it says, which is essentially when individuals in the financial markets copy the trading executed by other – usually top-performing – market traders and investors. As an approach, copy trading is a relatively new tool, dating back to around 2005 when both copy trading and mirror trading developed from automated trading; by 2010, copy trading had already become a prominent feature to be offered by online brokerages.

The foreign exchange market is the largest and the most liquid market in the world, and, as a result, has become the most popular market for copy trading. The approach is a form of portfolio management, where the trader is granted access to observe and monitor other leading traders in the financial markets and copy their trades. Nevertheless, copy trading does not involve layout access to the copy trader’s actual trading strategies, but instead, involves copying the same trades executed by the copy traders. Thus, one’s goal when copy trading is to find experienced traders that have an impeccable track trading record, and then choose both the amount of money to be traded and what trades are to be copied. Two major advantages of copy trading include how straightforward the process is, and a second advantage is that traders can copy from different traders and on different instruments; for instance, one may choose to copy a forex trader, someone who specializes in metals, and/or someone who specializes in stocks.  

Copy trading has many advantages, especially for beginner traders

Copy trading has many benefits for traders, irrespective of their level of expertise. For instance:

• Copy trading is advantageous and convenient for beginner traders who have limited knowledge of the market. The fact remains that financial markets are complex systems; therefore, copy trading allows novice traders to increase their efficiency despite their lack of market knowledge. However, although copy trading is particularly beneficial for beginners, they should still do thorough research and try to understand the market as much as possible.
• Copy trading helps traders learn from the best. There is always room for improvement, and copy trading helps to also discover new trading techniques from experienced and prominent traders.
• With copy trading, a trader can control losses. They can choose which top-performing traders or investors to observe and copy from to maximise their profit potential, but if an investment is not paying off, traders can choose to start working with another copy trader.
• Copy trading diversifies a trader’s portfolio. It’s an important aspect of risk management, whereby traders can spread their investments across a variety of traders trading different instruments, or can even select different timeframes or strategic approaches.

Copy Trade with OneRoyal

OneRoyal is set to always provide our traders with the best and most established copy trading services available. With OneRoyal, you can copy trade with:

• ZuluTrade
• HokoCloud
• MyFXBook

So, once you open your OneRoyal account, sign up to the copy trading service of your choosing to access, observe, and copy trade the strategies of leading traders.

Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances, or needs.

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