Copy trading has gained significant popularity as a form of social trading.This type of trading allows novice traders to replicate the trades of experienced traders in the Forex and other financial markets. While it offers the potential for higher profits, it also comes with risks. How profitable is copy trading? – Traders Union experts provided an answer, highlighting the profitability of copy trading and tips for selecting the best traders to copy.
Is copy trading profitable?
Copy trading can be profitable, but it’s important to note that there are no guarantees. The success of copy trading is mostly influenced by the traders you select to copy, the state of the markets, and your risk-management plan. Successful Forex traders typically achieve monthly returns ranging from 5% to 30%. However, even experienced traders make mistakes, and the unpredictable nature of markets poses liquidity risks.
Is copy trading free?
Experts at TU say, while some platforms offer free copy trading services, others may charge a small fee for using their platform. The specific fees can vary across platforms. For instance, platforms like RoboForex and eToro provide free copy trading without any subscription fees for traders to replicate trades.
Choosing a good trader to copy trades
Selecting a reliable trader to copy can be challenging. Here are 5 tips from Traders Union experts to consider:
- Trusted trader: Look for traders who have a significant amount of followers and copiers. Evaluate the confidence their followers have in them, as well as the profits earned by those who follow their signals.
- Returns: Avoid negative returns, and be cautious of excessively high returns, as they may be due to chance or excessive risk-taking. Analyze the trader’s monthly returns and seek consistent profitability.
- Number of trades and open trades: Consider the number of closed trades made by the copy trader. A large number of closed trades, especially over 1000, indicates experience and suggests that their success is not merely luck.
- Trader level: Some platforms rank traders based on levels, with each level requiring specific achievements such as managing losses, maintaining consistent profits, and increasing the amount of real money invested.
- Trading strategy and style: Read the trader’s profile description and understand their investment strategy. Assess their completed trades to determine if their approach aligns with your own.
Earning potential in copy trading
The potential earnings as a copy trader depend on various factors. As a beginner, it may be challenging to copy the trades of professional traders and generate substantial profits. However, after selecting and copying successful traders, your earnings can increase. The best professional traders generally achieve monthly returns of 5% to 30%. However, TU analysts point out it’s essential to remember that investment always carries a risk of loss.
Best copy trading platforms
Among the Best Copy Trading Platforms, Traders Union analysts have chosen the following ones:
- RoboForex
RoboForex is a well-known copy trading platform regulated by Belize’s International Financial Services Commission. It offers a user-friendly interface and valuable analytics for traders. With a low minimum deposit requirement of $10, it is accessible to a wide range of users. The platform boasts a significant network of 1400 strategy providers. However, some traders may find the platform’s filters to be inadequate. Additionally, there are concerns regarding the platform’s commissions and its registration with a business based outside the country.
- eToro
eToro is a reputable multi-asset investment platform that allows traders to copy the trades of investors across various assets, including Forex, exchange-traded securities, cryptocurrencies, and CFDs. Established in 2007 and licensed in Tier-1 and Tier-2 jurisdictions, eToro has gained popularity among more than 12 million traders. It offers a user-friendly interface, allowing users to build portfolios based on cryptocurrencies, trade popular stocks and ETFs, and engage with other investors. However, traders should be aware that eToro has slightly higher spreads compared to some other platforms.
Conclusion
According to analysts at TU, when it comes to copy trading platforms, RoboForex and eToro are two notable options. RoboForex offers useful analytics and a low minimum deposit requirement, while eToro provides a comprehensive range of trading assets and a user-friendly interface. Traders should carefully consider their individual needs and preferences before selecting a copy trading platform that suits them best.
