Copy trading involves the use of a copy trading platform to mimic expert traders’ forex trades. Copy trading enables a follower to benefit from an experts’ trading strategies as they, more often than not, translate into successful trades.
Copy trading is open to any forex traders be they beginners or expert traders. There are several reasons why some forex traders copy trade. The following comprises the reasons for copy trading.
1. Appropriate for Beginner Traders
Beginner traders are new to foreign exchange. They have no skills nor any understanding for performing foreign exchange trades. Most trades by beginner traders often flop. This can be very discouraging and may make beginner trader exit the market before they even get started.
Forex trade requires great trading experience plus skills. One has to read widely and practice consistently to get a grip of what forex trade is, and how best to go about it for profitable trades. A lot of forex tutorials and writings are available on the internet free of charge. A beginner trader ought to research and utilize online tutorials to sharpen their trading skills.
However, most times, beginner traders do not have the patience required to learn forex trade. They want to quickly jump into the trade and start making money as soon as possible. In that case, copy trading would be the most appropriate trading strategy for beginner traders to execute.
Copy trading does not require any special skills to execute. All the beginner trader can do is search through the forex market for expert traders study them to find out their rate of wins, and mimic their trades or trading strategies in their trades.
Moreover, as a beginner trader, you do not have to be there to observe the trades happen. You just pick the trades you want to mimic and signal your broker to place the trades for you.
2. Generates More Money
Forex trade can be an alternative source of income. Very few people do forex trade for just the fun of it. Most forex traders trade because they need to make profits and expand their wealth.
Copy trading provides the opportunity to trade more and generate more profits. With copy trading, you do not need to perform any analysis of trade. Since you trust the trader whose trades you are mimicking, you are content with placing the trade and are confident of making a profit out of it.
Hence, you place more trades while copy trading, and most if not all of the trades turn out successful. Therefore, copy trading aids in generating more money than regular solo trades.
3. Time-Saving
Forex trading can be very time-consuming, especially if you have to carry out an analysis before putting your money in a given forex trade. Forex analysis involves the use of fundamental or technical analysis tools to survey and analyze the forex market to find out whether the trade is worth investing in or not.
An analysis is mostly done when aiming at a particular level of accuracy in a trade. You have to do thorough research and collect data that you will require to perform an analysis. Also, you will require some tools to analyze the new trades.
However, with copy trading, the trades have already been analyzed and all you need to do is place the trades. If you must, the analysis you will carry out on a mimicked trade will be minimal compared to novel trades.
4. No Limitation to Who to Mimic
There are numerous copy trading platforms available online. All the trading systems or platforms provide access to thousands of forex trade options. The market is filled with many trading options than one may require. This provides the opportunity to make the best choice of trades to mimic from a pool of very successful traders.
Also, there is no restriction as to whom you can mimic. It all depends on your analysis of the successful trades and the choices you think will bring you exorbitant profits.
Conclusion
Copy trading is not a new trading strategy. Both new and experienced traders can implement it in their trades, given the benefits that follow it, such as more income generation and time-saving.