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For those who lack trading experience, knowledge, or time but still want to earn money in the financial markets, Copy trading is the best solution which allows individuals to automatically copy another trader’s positions when they are opened or closed.
Here, we explain what copy trading is, how it works, and offer a broker good for your copy trading experience.
1. What is Copy Trading?
Copy Trading is a branch of social trading, which allows individuals to automatically copy another trader’s positions when they are opened or closed.
The Copy Trading system gives copiers the option to copy all of the currently open trades of the copied trader by a certain respective proportion. So the trades will have the same stop loss (SL) and take profit (TP) as the original trade. And the profit/loss will also be calculated according to that percentage.
In fact, using the Copy Trading tool does not mean giving money to a third party (copied traders), but you still have full control over your account and trading positions.
Thanks to Copy Trading – an automatic copying system, traders will not have to spend a lot of time and effort to learn trading strategies from experienced traders but still earn money.
2. How does Copy Trading work?
The general idea of the Copy Trading tool is pretty simple: choose the traders you want to copy, decide on the amount you wish to invest, and copy every trade automatically in real-time with one click of a button. After that, it will connect your portfolio to the copied trader’s portfolio to a certain percentage.
From the moment you start copying them. All the trades of the original account will be copied to your account. Furthermore, all future trading actions (including changes in Stop Loss and Take profit and closing of the trade) will also be automatically copied to your account.
For example, you copy another trader’s account with your investment of 1000 USD. The original account has a capital of 10000 USD. Hence, your amount is equivalent to 10% of the original account’s amount. If the copied account opens trades and they make a profit of 5000 USD, then you will make 500 USD in profit respectively (equivalent to 10% of the profit of the original account).
3. What is the best Copy trading platform?
When it comes to Copy Trading, you cannot fail to mention eToro. Established in 2007, eToro has grown rapidly and is now present in 140 countries and territories with about 14 million registered accounts.
Copy Trading is one of the most outstanding features of eToro. It is famous for its intuitive and easy-to-use platform, as well as the publicity, transparency of all traders’ performance.
Especially, among Copy Trading brokers, only eToro requires traders to trade manually by themselves without using robots, which restricts the loss.
Here are some specific benefits when Copying Traders on eToro:
- With only 200$, you can start Copy Traders on eToro
- All information related to traders is public and transparent so you can consider it carefully before copying
- No copy trading fees on eToro
- Learn trading strategies and experiences from experienced traders free through the Copy Trading tool
Besides, Copy Traders on eToro also offers you full control over your account:
- You can close a specific copied trade without closing the copy account.
- You also have the right to reset Stoploss or Take Profit on each copy order.
- Pause Copy or stop copying whenever you want
Copy Trading is a handy tool for new traders, those who lack expertise in a specific market or have limited time to commit to trading. It allows you to experience the successes and failures of others and learn directly from their mistakes. This is also a great way to make money in the financial market without too much knowledge and experience. However, it doesn’t mean there is no risk when copy trading. Therefore, it is important for you to choose a good copy trading platform and effective copied traders.