Copy Trading is rapidly conquering a good slice of the online trading sector, being implemented with various facets in more and more platforms.
But a question that is probably asked by many investors and many professional traders is certainly: "what are the advantages and benefits of Copy Trading?".
Let's see together what are the most important benefits of this "new" type of investment.
Before starting to explain what the benefits of copy trading can be, it is worthwhile to make an overview of this type of social trading.
As the name itself suggests, copy trading consists of an automated trading method in which an investor or trader replicates the signals, or operations, of more or less professional traders (as we will see later) on dedicated platforms, such as eToro or ZuluTrade. How to find the perfect copy trader for your needs here www.acorn2oak-fx.com/forex-copy-trading.html
We therefore come to the doubt that haunts many people who, despite being interested, may be afraid to make the leap towards this new trading technology.
What are the benefits of copy trading?
This type of trading certainly offers various advantages, both for investors who would prefer to stay out of the game, and for more or less experienced traders.
Let's see together which are the most important ones.
Being able to start investing in the markets while having limited knowledge of them is undoubtedly one of the most inviting benefits of copy trading, but which needs to be clarified.
Undoubtedly, users and potential investors who have not studied the markets in depth may not feel able to try their hand at the challenges they have to offer. From this point of view, copy trading offers an enormous possibility, because we can follow expert traders who know how to do their job, trying to replicate their "luck".
However, no conscientious investor should think that, to get rich, you just need to sign up for a copy trading platform and follow those 3-4 traders to the top of the charts, simply because no investment works that way.
However, what it is possible to do (and which we highly recommend) is to carry out an in-depth and professional search to find the traders with the strategies that best suit the type of investment we intend to make (more or less risk, size of volumes , percentages of profit over time).
Becoming an expert in this kind of research, for which among other things we invite you to follow our guides , certainly does not require the time it would take to become experts in technical and fundamental analysis of financial markets, and to actually start trading first. person.
We therefore find some traders who convince us and take advantage of their experience.
This is another major benefit of copy trading.
In the most classic form of investment through copy trading, the users who invest do not work as traders, while the Signal Providers, or those who create the signals to be replicated for the various followers, do.
This means that once we have created our portfolio of people (another key concept of copy trading), making sure that we have chosen professional traders (unfortunately, copy trading platforms are also full of less serious traders), we will not need to constantly stay on the look at the graphs in anxiety.
With Copy Trading, investors can focus primarily on their work, because the Signal Providers, who trade as a profession, take care of the investments.
This obviously does not mean that we will never check the platform, but we will certainly waste much less time than if we were to carry out the operations ourselves.
Connecting directly to what is arguably the most important of the benefits of copy trading, this is undoubtedly an advantage that applies to both traders and investors, be they newbies or veterans.
Given the nature of copy trading, one cannot underestimate the educational experience that can result from it, if taken with the right approach.
By observing a professional trader at work, we are offered the opportunity to learn to recognize the best moments to open trades on various instruments. This is obviously positive as it allows less experienced followers and traders to learn outside the scope of demo accounts, being able to observe the strategies of professional traders firsthand.
Furthermore, all this can be done in an environment that is not necessarily "didactic" and isolated, an environment in which it is also possible to obtain profits without the risks associated with our inexperience.
A problem mainly associated with Mirror Trading, similar to Copy Trading in terms of dynamics but much less customisable, is precisely the inability to adapt the feed of copied operations to your investment portfolio.
On the other hand, most of the most voted Copy Trading platforms, such as eToro and ZuluTrade, allow their users an incredible level of customisation. For example, we can operate as a percentage on the lots and on the size of the operations carried out by our Signal Providers.
This opportunity is little taken into consideration when it comes to Copy Trading, but it actually allows users to start investing even where there may be some uncertainty. It is enough to decrease the ratio of operations compared to those carried out by our portfolio of traders and already in this way we will see the risk of losing our investment drastically decrease.
The customisation offered by copy trading can also prove to be very useful if we want to test some less experienced Signal Providers, or who use riskier strategies and, in general, allow greater diversification of our investments.
Copy trading can also work very well in terms of investment diversification. Not only can we diversify by deciding to copy the signals of different traders, but we can also choose traders with very different characteristics.
We can combine traders who operate with medium-long term perspectives with traders who prefer intraday trading; or, traders who operate exclusively on forex with traders specialized in equities, or why not also in cryptocurrencies.
The latter benefit of copy trading is aimed specifically at traders and is certainly the most pragmatic.
Traders who operate on copy trading platforms are paid if there are investors who replicate their signals or if they pay to be able to see them.
So, if you are a trader who already operates in the industry, why not switch to a technology that allows you to make more money if you do well enough to attract followers to replicate your trades?