Copy Trading is a method to replicate the trades of experienced traders in your account directly as soon as they execute.
To understand copy trading clearly, you must know 3 things
- The Trader (Signal Provider)
- Follower (Subscriber or Copier)
- Copy Trading Platform (XM, Vantage or any third party platform)
Signal provider or experienced trader trades in his/her account, follower or subscriber whoever follows that trader account will get those trades copied in their account without any effort.
Followers need to understand few things
- Minimum Investment amount
- Multiplier
- Trader own invested funds
Minimum investment amount is the minimum amount of funds required to copy the signal provider. With this, you will understand how much minimum capital is required to subscribe to the signal provider account.
Multiplier is also called the copy ratio, it is the size of trades openend in your account relative to the trades opened by the signal provider you are following. For example, if signal provider is trading with 10 lots but you don’t want to keep the same multiplier, you can keep the multiplier as 0.5, so that in your account only 5 lots will be opened. (Recommended to keep the multiplier 0.5 or 1)
If the trader or signal provider has huge funds, trader can handle large swings of volatility but your copier account cannot handle that, it will be downside risk for the followers. If trader also have similar amount of funds, there will not be any disparity.
In the above image, multiplier is set to 1, when you are copying the signal provider, you will have an option to set the multiplier parameter.
Copy trading acts as a passive income tool for working professionals by outsourcing market analysis and trade execution to a signal provider.
If you want to know more about platform, depoits/withdrawls, risks involved, scaling the capital, fees, just DM.
