July 16, 2021, | AtoZ Markets – Copy trading is one of the trending forex trading topics. What then is copy trading?
Who are professional forex traders, and why should there be a concern when they apply copy trading? Are there alternatives to copy trading that a professional trader can utilize?
Yes, as a professional trader, you should use copy trading. However, its limitations may demand that you seek the best alternatives.
You are about to learn the logic behind copy trading, when you need it, and what to do if it fails to boost your forex profits. Let us start by defining copy trading.
What Is Copy Trading?
Forex copy trading is explicitly making trades as another trader. For example, assume you about to make trade entries on USDCAD currency pair.
Instead of analyzing the market, you tell a machine to spy into the volume and prices of an expert trader. The machine then starts a trade or stops it as soon as the novice trader halts his or her.
Similarly, the machine makes stop-loss and take-profit orders exactly as the expert trader. You are probably wondering about the role of a professional trader in the copy trading equation.
Who Is A Professional Forex Trader?
A professional trader is a trader who monitors the market and trades when the price changes. The trader’s primary aim is the profit maximization per trade.
In a non-automated market, the trader can be a forex chart technician. Here, (s)he conducts technical analysis using technical indicators such as Moving averages, Relative Strength Index, Fibonacci retracements, and Bollinger bands.
The trader can proceed to check fundamental market forces such as social, political, and economic factors.
What Makes A Professional Trader Apply Copy Trading?
Bearing in mind the amount of calculation needed for technical analyses, you may be forced to perfect your mathematical skills.
Another hurting factor is that despite tiresome calculations, most technical indicators are unreliable in a trending market.
So, you must monitor several technical indicators, analyze them to determine the market direction. The research and analysis overwhelm you. That is why you should rethink the role of copy trading.
When and How Should A Professional Trader Use Copy Trading?
Start copy trading today if you hate seemingly unending technical calculation. Use a copy trading platform if tracking the fast-changing forex market forces overwhelms you.
Also, rethink copy trading powers if you are a beginner trader, diving into forex trading to learn from experts and earn quickly. Lastly, copy trading is your gaining formula if you are an investor and lack time to follow trades.
Choose a copy trading platform. Register for trading. You can start with a demo account or with little investment and later deposit huge funds for massive gains.
Keep in mind that copy trading limits the amount you can invest per copied trade. That is why you should check copy trading forms and alternatives.
Copy trading vs Mirror Trading vs Social Trading
Copy trading originates from mirror trading, where you track trades of experts. Here, everything is automated. The trading platform gathers strategies of expert traders and grants them to you through artificial software.
Mirror trading does not let you choose whose trades you want to mimic like with copy trading.
With copy trading, you rely on actual trades, not strategies as seen in mirror trading. The weaknesses (or strengths) of copy trading and mirror trading resulted in social trading.
Social trading gives you a medium to interact with novice traders, enabling you to grasp both strategies and trades.
Additionally, you have the technical indicators, formulae, and news releases at your fingertips. It suits you if you want to simplify your trades and conduct voluminous trades.
With the perfection in big data and artificial intelligence, you should rethink the role of copying trading. It simplifies decision making, gives you a learning and growth platform. You end up earning higher from forex trading.