Trading and investing seem like things only adults can do: two words that become increasingly difficult to say in the same sentence as “I’m twelve years old.” Even if you’re an adult, trading and investing can be scary. Many people don’t know where to start or feel they need a lot of money upfront (which often isn’t true).
Copy trading is a relatively new form of trading that helps people overcome these challenges – and it’s popular with CFD brokers in Australia. This article will give you everything you need to know about copy trading, so read on.
What exactly is copy trading?
A copy trader allows you to browse their profile and follow their trades, automatically copying every trade they make. When you follow a trader, you can monitor their performance over time. If they’re making good decisions, it’s easy to see that they’ll continue to do so.
Trading isn’t just about following your instincts: having someone well-informed and experienced makes the process much easier. Copy-trading works like social media: follow or add traders you think are worthy of your attention.
Copy trades allow people to move away from traditionally risky forms of investing such as day trading, novice day trading, penny stocks and forex. It helps even out the playing field in terms of knowledge: whether you’ve been trading for years or if this is your first attempt, joining a copy trade group gives you access to everything you need to make better investments. It is an excellent way to learn all the effective steps to becoming a pro-trader as you follow the trader.
The benefits of copy trading
It’s free
The first reason it’s beneficial is that you can take advantage of professional advice without breaking the bank. You don’t need to pay hefty account fees or monthly commission fees to help with your trades; you follow other traders and mimic their actions.
It’s easy
No matter the time zone you’re in, there will always be traders available to copy. Several online services allow you to follow traders worldwide – so no matter where your background comes from, you’ll have access to information that allows you to invest successfully at any time during the day.
Copy trading removes luck
Let’s go into this in more detail below, but the essential point is that copy trading lets you see exactly how successful traders decide on their investments. You get to see what they’re doing and why; it’s not based simply on luck.
It can make you money
Following good traders will typically succeed in investing. Successful traders tend to make several trades per day, so if you follow them closely, you’ll likely start making money straight away!
What are the disadvantages of copy trading?
Although there aren’t any significant risks associated with copy trading, there are some things that should be pointed out before getting started:
Luck
As mentioned above, traders that rely on luck won’t be particularly successful in copy trading. There’s no such thing as a “lucky trader”: just because they have lots of followers doesn’t mean they’ll make you money. Luck is purely based on chance or being in the right place at the right time.
Professional advice
Copy-trading gives access to professional advice without having to pay for it, but it’s important not to cheat yourself by spending all day glued to your computer screen watching every trade made. The point is that you get help with investing to become more accessible, but there are still some personal decisions that need to be made.
Risk
When you invest your money in a trader, it’s essential to understand that there is still an element of risk involved – regardless of how well informed or skilled they might be. There’s also always a chance that the market will move against you, and you’ll lose your initial investment – even if it wasn’t very much at all.
How do I find a copy trader?
Now we’ve gone through what exactly copy trading is, along with some of the benefits and potential risks associated with it – let’s look at how you go about finding a copy trader who meets your requirements.
Several websites allow you to find copy traders near you, but the best way is to search online for “copy trading Australia” or similar.
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