Full Guide To Start Copy Trading Today
Copy trading is a type of trading that has emerged over the years. Not all traders are aware of this technique and its benefits. It is claimed that the traders who implement this approach get a 5% to 20% annual return on their money.
AdroFx offers an easy and frictionless way to enter copy trading. In this article, we will go through how you can start copy trading with AdroFx and all the information you need as a beginner to help build a strong foundation.
A foundation to copy trading
Copy trading is simply defined as the act of a trader copying the trades of another trader. This trader who is being copied allowed other people to copy their trades in return for a commission from the profits or a downpayment. One of the copy trading benefits is that copy trading can be automated. A manual route can also be taken or both as not all traders have the time to always sit down and trade by themselves.
This technique can be very useful for beginners, as they may lack the experience needed to make successful trades. Copy trading can also enable them to learn from other traders and open their minds to strategies that may have been neglected or not fully understood. Not only beginners use copy trading, but experienced trades do too. The benefits that experienced traders can get is that they can learn new strategies they haven't used therefore raising their success as a trader/investor.
What do copy traders do?
The way you can access copy trading is very simple. Many platforms offer copy trading with their other services, AdroFx for instance. Once you have chosen a platform that offers this service, you now have to pick a trader that you want to copy. It is best to choose a trader who has the same goals and desired results while trading as you. Luckily AdroFx offers you the top traders to choose from. Once you have settled down on a trader you can take the next step. The amount of money invested is up to you. It is best not to put all investments into one trader but spread out among different people to minimize risk and improve profitability.
The platform will now automatically copy all the trader's moves and positions and implicate them into your account. A copy trading benefit is that you are not bound to the trader's moves only. At any point, manual trades can be performed as you may not agree with a move the trader has made. With time you can determine which trader works best for you, and relocate funds or even invest more. Always keep in mind to spread your funds among more than one trader.
Why should you use copy trading?
Risks are always present in any type of trading. In copy trading, the risk taken can be called an "educated risk" after you have chosen a trusted trader to copy. There are many copy trading benefits one of them being efficiency. The reason copy trading is so efficient is that all trades are automated. This can save you a lot of time and energy, especially when starting out and not knowing how to analyze markets independently.
A big copy trading benefit is the ability you have to use the knowledge of an experienced trader. That can be very useful especially when you lack or have no knowledge about a specific market. The exposure you get to new markets that previously have been unknown to you is highly beneficial. All this can raise the amount of profit that can be made.
To acquire all these copy trading benefits a studied choice of the ideal trader for you must be made. The risk factor is always present though even with highly experienced traders.
Copy trading and Social trading differences
Copy trading is a useful trading strategy as it may seem very similar to social trading, but some differences separate them.
Copy trading is an automated process that directly copies a trader's positions and applies them to your account. This can be very useful for beginners as they have access to advanced strategies they don't fully understand. A drawback to that is the copied trader won't be able to learn much. This limitation to learning will hold the trader back on how to improve himself.
Social trading on the other hand is a more community-based strategy. The way it works is that there are different communities either chatrooms or message boards and even social news feeds. This approach allows traders to learn a lot and improve their trading. The different traders come together and share their experiences and strategies they have used. Discussions are made to help each other excel in their trading. Social trading allows the traders to receive from the community and give back.
Pros and Cons
Acknowledging the benefits copy trading can provide and the drawbacks it may contain is essential for success. Nothing ever is risk-free and has no drawbacks to it including copy trading.
Pros:
- High efficiency
- Time-saving
- Gaining knowledge from experienced traders
- ease of access
- Market diversity
Cons:
- Liquidity risk
- Market risk
- Limited learning
- Expensive
The important conclusion to copy trading
Copy trading is very helpful to traders who want to expand their profits while saving time and energy. That makes copy trading a relaxing experience as all the analyzing and trading is done by the trader. Unfortunately, this doesn't come risk-free. The chance of losing money is present as the trader may be experienced but not immune to mistakes and unexpected market movements. Beginners can benefit the most from copy trading since their market knowledge and experience is low. Copy trading won't help them in becoming highly skilled traders as most of the trading is being done for you.
In all, copy trading is very recommended to anyone with little experience or little time to spare. Having acknowledgment of all the risks that can happen is necessary to know what to expect. Now that you know what copy trading is and all the fundamentals around it, you can start trading with AdroFx and start your copy trading journey today.