What to Think of Copy Trading and What Are Its Challenges?
For a few years now, copy trading has been one of the hottest tools used by the rush of "young traders." We owe copy trading to the very first site to offer it, Zulutrade. Since then, several platforms have offered this option. Even if in the world of trading, some brokers choose to shine negatively, others strive to offer quality services and set up the necessary support for any broker, regardless of their level.
In this article, you will learn more about copy trading and its challenges so that you can form an opinion.
Which trader to follow
The choice of trader can be made depending on the type of investor you are looking to copy. It depends on the capital you have and the level of risk you are willing to take. It is necessary to take the costs incurred by each operation into account.
Long experienced by several successful traders, eToro is today, without any pretension, the best copy trading broker. With nearly 13 million users, it offers risk management features. To identify the best suppliers, keep these few criteria in mind:
• The investment period,
• The success rate,
• Trader history,
• Risk aversion,
• The level of expertise,
• Popularity
Benefits of copy trading
We can define "copy trading" as one of the trading techniques aimed at following the positions of a professional trader to be as successful as him. Copy trading can be a great experience for someone who is still new to the field.
Indeed, it is a process that allows seasoned traders as well as beginners to invest professionally. Based on the work of other experienced traders, they can therefore make significant investments in the financial markets (forex, crypto, etc.) to generate significant profits. This is a process you can end at any time.
Another advantage that does not go unnoticed is the accessibility of copy trading in the sense that it does not require a large initial investment (between $100 and $200). Finally, there are a large number of signal providers. Hence the advantage of selecting the profile of the supplier that corresponds to your level of risk. You have the advantage of automatic management of your portfolio.
The risks
Although some sites display risk indicators, many individuals pay little attention to them. The performance of traders is so highlighted that the evidence of risk is relegated to the background. While risk management is an integral part of the quality of a trader all novice traders are on the lookout for traders who exhibit a consistent rate of risk management. They sometimes forget that you have to take huge risks to achieve performance.
Some individuals use leverage based on their choice of traders. Note that some brokers also offer copy trading platforms for commissions such as the spread, one of the highest on the market. This ruins the customers' experience even more. The major disadvantages are the complete dependence on the decisions; the dependence on the technology of the broker; and the fact that the "guide" trader can change his strategy without taking the copy trader into account. There is no guarantee of the predictions made. For all the tips on trading, do not hesitate to go here.
Tips for choosing your copy trading broker
Countless criteria go into choosing a copy trading broker. We remember a few:
• Good performance in turnaround time.
• Good information to make available to the trader
• A catalogue of financial instruments
• An available and active customer service.