What is Copy Trading?

Copy trading is a form of investing that enables individuals to automatically replicate the trades and strategies of experienced traders. This approach allows investors, particularly beginners or those with limited time or knowledge, to benefit from the expertise of more seasoned traders without needing to actively manage their portfolios.

In copy trading, investors select one or more traders to follow on a social trading platform. Once a trader is followed, the investor’s account automatically copies the trades executed by the trader in real-time, proportionally adjusting the investment size based on the investor’s allocated funds. This process streamlines decision-making and allows investors to diversify their portfolios by following multiple traders with different strategies, trading styles, and assets.

Copy trading platforms often provide detailed information about each trader, including historical performance, risk metrics, trading frequency, and the assets they trade. This information helps investors evaluate and select traders to follow based on their investment goals, risk tolerance, and preferences.

While copy trading can offer several advantages, such as simplified decision-making, learning opportunities, and diversification, it also comes with risks. These risks include reliance on others’ decision-making, limited control over investment decisions, and potential costs associated with performance fees or platform fees. Therefore, it’s essential to approach copy trading with realistic expectations and to conduct thorough research when selecting traders to follow.