What is copy trading?

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Telegram Forex Signals Copy allows participants to replicate the trades placed by other, often more experienced traders in real time. The idea is to find a trader with a proven track record and begin copying their trades.

What is copy trading and how to copy trade

Provider: This is the trader whose trades are being copied. Sometimes they are also referred to as a “Master Trader” or “Signal Provider”.

Copier: This is the person copying the provider’s trades, using their own trading account.

Broker: The broker provides access to the copy forex trading platform (like an app or MetaTrader 4) which allows the provider and copier to connect.

How to copy trade?How does copy forex trading work?

  • As the signals trade and build a track record, their performance data, including monthly returns and profitability, can be monitored through the app.
  • Copiers select which signals to follow. Once a copier connects to a signal, every transaction executed by the signal is automatically replicated in the accounts of their copiers, proportionally adjusting for factors like available funds and risk preference.
  • In return, the signal trader charges the copier a percentage of the profits.

How to copy trade?

To be able to start copying someone’s trades, first, you need to open your own live MT4 trading account. This is the account you will use to follow other traders. It’s worth noting here that once you’ve got a live account, you always have the option to open additional sub-accounts, which gives you extra flexibility. For example, you could use one account for manual trading and another for copying trades.

Once that’s done, you’ll be able to see a list of providers whose trades you can copy. Now it’s simply a case of clicking on a trader to view their stats – this typically includes things like their past performance, drawdown, and the things they typically trade.

To be able to start copying someone’s trades, first, you need to open your own live MT4 trading account. This is the account you will use to follow other traders. It’s worth noting here that once you’ve got a live account, you always have the option to open additional sub-accounts, which gives you extra flexibility. For example, you could use one account for manual trading and another for copying trades.

Once that’s done, you’ll be able to see a list of providers whose trades you can copy. Now it’s simply a case of clicking on a trader to view their stats – this typically includes things like their past performance, drawdown, and the things they typically trade.

Before you confirm that you want to copy a trader, you can adjust the overall risk settings to suit your own goals and risk tolerance. This is important because all traders come from a different starting point – for example, an experienced trader might have more money to trade and a higher tolerance for risk than someone who is less experienced especially for those who lack the time or resources to trade on their own. Either way, the ability to change your individual settings helps ensure you remain in control over how much you are risking on each trade.

If all you want to do is copy trades, there is no manual intervention required. You simply click ‘copy,’ and your account will automatically start copying the trades of your chosen signal provider.

You’re then free to go off and do other things while the system keeps running in the background. However, you should always keep an eye on your account, not only to track the performance but also to ensure that you always have enough margin in your account.

How to copy trade

If you are looking for a specific signal provider and know their username, you can use the “Search” function at the top of the screen.

Otherwise, you can scroll through the providers ranked by their all-time performance or daily

Advantages of copy trading

  • Flexibility: the copier still maintains control of how much they want to risk per trade. For example, if the provider is trading large lot sizes but the copy trader has insufficient funds in their account, they can adjust the trade size, so it works proportionally to their own account balance.
  • Efficiency: Becoming a successful trader is a long journey and not every trader can dedicate multiple hours per day to this.

Disadvantages of copy trading

  • Picking the right trader can be difficult: If you were thinking of buying into a stock or investment fund, you would probably spend some time doing research to figure out if it’s the right decision, and this is the same sort of approach you should use when choosing which traders to copy. You need to realise that it’s not necessarily the trader with the highest monthly return you want to copy. There are always other factors to consider, such as maximum drawdown and how much trading history the trader has.
  • Understand the risk: can be risky because losses are replicated in the same way that wins are. While you have some control over the risk (for example, how much money you will allocate to your trading account and the risk settings), you do not control the trades of the trader you are following. Market conditions may change, and the master trader may struggle to adapt, or they may be stressed and unable to control their emotions when trading. While these things are beyond your control, you do need to consider them.
  • Additional costs: Some providers charge a subscription fee if you want to copy their trades, so always check before you trade.
  • Fixed size: When you’re copying an account, “fixed size” means that you select the total size of the trade you’re about to make. So, even though you are copying the signal’s position, you are not necessarily copying the size of that position. Instead, you get to set your own.
  • Mirror master size: Mirror master size directly copies the size of the signal that you wish to copy. For example, if the trader you want to copy has bought £50 worth of gold, choosing “mirror master size” will also buy you £50 worth of gold. This function copies the signal trade size for all trades, irrespective of your or the master trader’s account size.
  • Mirror master risk: When copying a signal, “mirror master risk” adjusts the size of your trade relative to your account size, so that you take the same percentage of risk as the signal you’re copying. To put it another way, buying £5,000 of CAC40 is much riskier for an account with a balance of £5,500 than for one with £100,000.
  • Max drawdown: A maximum drawdown (MDD) is also known as a “Hard Stop”. This is the maximum observed loss from a peak to a trough of a portfolio before a new peak is attained. Maximum drawdown is an indicator of downside risk over a specified time period. It’s important to note that it only measures the size of the largest loss and does not consider the frequency of these losses. The max drawdown is a % value and will apply to your entire account and NOT just a specific signal.
  • For example, if you were to set a Max Drawdown value of 30% when the equity value of your account falls by 30%, all copying is suspended and all trades that have been sourced from a signal are closed. Note that no new copy trades can be placed on your account until you adjust your Max Drawdown further. In the example above you would need to extend your Drawdown to 40%, for example.
  • Warning level: When your drawdown reaches the percentage you input at the “warning level”, the app will send you a notification to inform you that this level has been reached.
  • Soft stop level: If the drawdown reaches the soft stop level inputted by the user, copying will be suspended.
  • Hard stop level: If the hard stop level is triggered, all trades will close, and copying will be suspended.

Ready to trade your edge?

Trading foreign exchange markets involves buying or selling one currency in exchange for another

For example, the trader with the highest return might experience massive drawdowns or could have a very short trading history. Other traders might have lower returns but demonstrate greater consistency. Unfortunately, there is no way to remove risk from trading, but you can help to reduce it.

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No trader wins on every trade, and even though you might have picked them because they have positive results overall, the provider you choose to copy might go through a period of drawdown – meaning that you would be facing losing positions. One way to try and mitigate this risk is to use multiple providers, preferably with different trading strategies/styles to achieve diversification.

What is the minimum amount required to copy a trader?

If you do start with a small amount, you might want to narrow down your choice of signal providers to one, as you would otherwise exhaust your margin pretty quickly. Note that some signal providers specify a minimum investment amount to ensure the trades will be going through for the copier.

PSYCHOLOGY OF A TRADER | MASTER EMOTIONS & MASTER THE MARKET

Copy Trading platform can be used free of charge, with the benefits of the same ultra-low spreads and lightning-fast execution that are a feature of traditional MT4 trading. Some signal providers will charge a subscription fee for their services, while others might provide it free of charge. This varies from provider to provider.

However, keep in mind that even if a signal provider does not charge you anything, you still have to pay the broker’s spread and/or commission (depending on the account type you have).

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Which copy trading platform should I use?

Copy Trading app allows you to easily connect to your MT4 account and start copying a variety of traders. The in-built leaderboard will give you quick insights into the top provider’s performance and help you in choosing the one that suits you. 

It’s worth remembering that you retain full control over your account, meaning you can pause or completely disable the copy trading for each provider at any time. Furthermore, you can control your risk by either mirroring the provider’s level of risk and position size or by setting a fixed size per trade.

Can other traders copy me?

Absolutely! You can sign up to be a signal provider so that others can copy your trades. Note that you may have to complete some additional documentation before you can start providing signals and charging copiers.

Once the process of opening an account and connecting it to the copy trading platform is completed, you’ll see why copy trading is so appealing

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To give yourself a better chance of long-term success, you should make an effort to keep yourself educated in the markets and ensure you understand the risks involved, as well as the different risk parameters that can be adjusted prior to following someone’s trades.