Want to profit from the fast-paced forex market without having to become an expert? Copy trading might be the perfect solution for you.
Copy trading in forex is simply a way of making currency trades without the need for extensive experience as a trader yourself.
The idea behind copy trading is that you utilise other traders’ experience and expertise in order to copy the positions taken and make the same trades that they do. Trading currency in this way is often seen as an ideal way for novice investors to get trading in forex markets quickly without having to learn how to read market conditions and watch charts all day themselves.
Like the idea of trading forex but don’t know where to start?
Copy trading lets you dive into online trading by observing other investors instead of complicated market graphs.
This means you can choose the most successful traders to follow and profit from their experience when investing your own cash.
Let’s dive into the topic of copy trading in forex, including the Pros and Cons of doing it.
How Does Copy Trading Work?
Copy trading is a straightforward process that allows you to mirror the trades of experienced forex traders. Here’s how it works in three simple steps:
- Choose a Platform: Sign up for a reputable copy trading platform that offers transparency and a diverse range of successful traders to follow.
- Select a Trader: Browse through the profiles of expert traders. Platforms typically display key metrics such as win rates, total returns, and risk levels, helping you make an informed decision.
- Mirror Their Trades: Once you’ve chosen a trader to follow, your account will automatically copy their trades in real time. Whether they buy or sell, the same trade will be executed in your account, allowing you to benefit from their expertise without the need for hands-on involvement.
Pro Tip: Always assess a trader’s risk tolerance and trading style before following them. A high win rate is appealing, but the volatility in their strategy might not align with your own risk preferences.
Whichever method of copy trading you choose, you must be able to make sound, informed decisions on which investors to follow in the first place and which trading platforms that you want to use. These seemingly simple decisions can prove to be a bit of a nightmare and costly to get right for those new to the trading arena – which is where Trade Wise comes in.
How Can Trade Wise Help You?
I have set up Trade Wise to test and review copy trading products and services. I offer my personal opinion and reviews to share the most profitable and useful tools based on usability, reliability and performance based on my own use and experience. This means that even novice traders can begin copy trading in Forex with the comfort of knowing that they’re using tried and tested software like my top three recommended
View full reviews for Top 3 services for forex
If you’re interested in finding out more about copy trading in forex read on for a more detailed overview and my personal recommendations to get you trading successfully in forex.
What Is Forex?
Forex is the abbreviation used to describe the ‘Foreign Exchange Market’, which is a global marketplace for trading currencies against each other. Just like you can trade shares in companies on the stock market with the intention of making a profit, forex traders work by trading one currency for another when speculating the direction the value of currency is likely to take next. Currencies are traded in pairs and you can see an overview of popular currency pairs below.
| COUNTRY | SYMBOL | COUNTRY | SYMBOL |
| United States | USD | Switzerland | CHF |
| Eurozone | EUR | Canada | CAD |
| Japan | JPY | Australia | AUD |
| Great Britain | GBP | New Zealand | NZD |
Table Source: Forex.com
The forex market is one of the largest trading arenas in the world with over $5 trillion of cash being exchanged every single day. Unlike other financial markets, currencies trade in whatever market is open at the time such as London, New York, Hong Kong and Sydney. This means forex trading can take place 24 hours a day, 5 days a week by banks, institutions and individual traders worldwide.
Copy Trading In Forex Markets
The process of copy trading is the same whichever market you’re investing in, it’s just the investment vehicle that changes.
By piggybacking the actions of other forex traders, you become their investing shadow and can easily make money based on their skills – providing they know what they’re doing of course. If they open a new trade, so do you. If they close, you close and if they win, you win! Don’t forget though that if they lose, you will lose too. Just because you’re connected via trading profiles in this way you still have the ability to close trades and open new ones at any time so you can ultimately have control of your investment outcomes.
Copy trading forex is a great way for inexperienced traders to determine the right traders to follow and the right trades to make. It is particularly beneficial for those who don’t have a lot of spare time to dedicate to studying charts, and market trends and learning technical analysis techniques required by more experienced investors that make studying the markets their day job.
See my post “Does Copy Trading Work?”
Benefits of Copy Trading in Forex
Copy trading comes with a range of benefits, particularly for those new to forex or those who don’t have the time to actively manage their investments:
- No Need for Expertise: You can leverage the knowledge of experienced traders and skip the steep learning curve of understanding technical analysis and market movements.
- Time-Saving: Instead of constantly monitoring charts and reading economic reports, you can automate your trades based on someone else’s strategy.
- Diversified Strategies: Follow multiple traders with different strategies to diversify your portfolio, reducing risk and increasing your chances of success.
However, it’s important to remember that even experienced traders can make mistakes, so there’s always a level of risk involved. The key is to manage that risk by choosing traders with solid track records and transparent strategies.
Risks and Considerations in Copy Trading
While copy trading offers convenience, it’s important to be aware of the potential risks. Here are some things to consider before diving in:
- Dependence on Another Trader: Your success hinges on the performance of the trader you’re copying. If they make poor decisions, you could suffer significant losses.
- Limited Control: Although you can stop copying a trader or manually override a trade, the real-time nature of copy trading means you may not always act in time to avoid a bad trade.
- Costs and Fees: Some platforms charge commission or fees for copy trading services. Be sure to factor these into your overall trading strategy, as they can eat into your profits over time.
Choosing The Best Forex Copy Trading Platform
How to Choose the Right Copy Trading Platform
Choosing the right platform is critical to your success as a copy trader. Here are a few things to look for:
- Transparency: Does the platform clearly display trader profiles with detailed performance metrics? You’ll want access to information like risk levels, past performance, and trading history before committing your funds.
- User-Friendly Interface: Especially for beginners, a platform with an intuitive design is important. It should be easy to navigate, execute trades, and monitor the performance of the traders you’re following.
- Regulation: Always choose a platform that is regulated by a reputable financial authority to ensure your money is safe and that the platform follows industry standards.
- Customer Support: Since trading can happen 24/5 in the forex market, ensure the platform offers responsive customer service in case you encounter issues.
There are hundreds of trading platforms to choose from so it can be hard to know where to start. This was the position that I also found myself in when I began trading over 15 years ago, and as a result, made plenty of mistakes and lost cash along the way. Now that I am successfully trading and making regular profits, I hope that by sharing my personal experience and honest reviews on some of the best platforms available to copy trade, that you can have a quicker route to trading success!
View my top 3 services for copy traders
Summary
I hope this article has given you a basic overview of copy trading in forex and an idea of which platforms to use for the best chance of trading success.
- Copy trading in forex is a great way to start trading the fast moving forex markets without having to understand the intricacies of technical market analysis yourself
- Forex is the marketplace for trading currency and is open 24/7
- You can choose the style of copy trading that is right for you based on the level of involvement you want in making your trades. Consider signals, bots or following other traders.
- Pay attention to tips and reviews from experienced copy traders but ultimately you should always do your own research before investing your money and only invest what you’re prepared to lose.
If you’re looking for regular updates on what major copy trading platforms are doing, what works well and what doesn’t work so well, then please do subscribe to my mailing list. I keep my subscribers up to date on everything copy trading, EAs and bots as my personal experience of using the platforms I invest in evolves.
