For more than ten years, the practice of forex copy trading has been gaining traction and becoming increasingly popular.
This method, also referred to as social trading, mirror trading, or auto trading, utilizes the speed and accessibility of information available through social media and faster internet connections to disseminate industry updates, financial news, and market analysis.
The combination of these factors with crowd dynamics and advanced sentiment data has given rise to social copy trading platforms.
As a result, investors are now able to generate their own trading signals and enter the market with new positions that others can mimic. Consequently, the demand for these platforms has skyrocketed in recent times.
Best Copy Trading Forex Brokers
- eToro – Best Overall Platform for Copy Trading Forex
- CMC markets – Best for Asset Range
- AvaTrade – Best for Minimum Deposit
- Blackbull Markets – Best Copy Trading Forex for Multiple Platforms
- Pepperstone – Best for International Traders
eToro – Best Overall Platform for Copy Trading
Positioning itself as the largest platform for social trading globally, eToro stands out with its extensive client base spanning 140 countries. eToro prides itself on its expertise in various financial markets, including stocks, ETFs, commodities, currencies, and cryptocurrencies.
When it comes to leveraging major forex pairs on eToro's platform, the maximum leverage available is set at 30:1. For minor pairs, the leverage drops to 20:1.
Commodity CFDs offer a leverage of 10:1 while stock CFDs provide a leverage of 5:1, and crypto CFDs have a leverage of 2:1. (Please note that only U.S. traders can access cryptocurrencies.) To open a copy trading account on eToro requires an initial investment of $200.
eToro offers social trading through two main avenues. The first option allows users to manually browse through numerous trader profiles and analyze their statistics before making any decisions regarding copying their trades or strategies.
Alternatively, users can explore CopyPortfolios, which enable them to replicate the portfolios of top traders or create diversified baskets encompassing different securities under one specific trading strategy.
In addition to these features, eToro provides every member access to a comprehensive newsfeed within its social network interface, where they can also chat with other users.
It’s worth noting that few platforms can rival the vast network of experts available on eToro's platform for users seeking insights and opinions from experienced professionals in various fields related to finance and investing.
- A wide array of tradable markets
- Abundant opportunities for copying investors
- User-friendly platforms and mobile app
- Compulsory stops and limits on trades
- Absence of automated trading strategies
- Limited research compared to rivals
CMC Markets – Best for Asset Range
CMC Markets , a reputable financial services provider renowned for its extensive selection of trading and investment solutions, offers an exceptional feature called copy trading. This innovative tool is tailored to cater to both novice and experienced traders by allowing them to replicate the strategies and trades of more seasoned investors.
To ensure traders are equipped with the necessary information to make informed decisions, CMC Markets provides a variety of performance metrics for each trader in their copy trading network. These metrics include historical performance data, risk measurements, and trading strategies.
By incorporating these metrics into their decision-making process, users can select traders whose styles align with their own risk tolerance and investment objectives.
Furthermore, CMC Markets' copy trading feature includes robust risk management tools that allow traders to set limits on their trades and adjust their risk settings for the copied trades according to their preferences.
- Regulated and trustworthy
- Diverse market selection
- Advanced trading platforms
- Minimum deposit requirement
- Inactivity fees may apply
- Complexity in usage
AvaTrade – Best for Minimum Deposit
AvaTrade is a reputable international company that provides a diverse range of trading platforms, outstanding educational material, and competitive pricing and research options. AvaTrade excels in the field of copy trading with its offerings, such as AvaSocial, ZuluTrade, and DupliTrade.
- AvaOptions app excels as a mobile forex options trading platform
- Provides 44 forex options and 1,200+ CFDs
- Retail account pricing is on par with the industry average but lags behind leaders
- Desktop platform experiences slow loading and outdated design
Blackbull Markets – Best Copy Trading Forex for Multiple Platforms
Blackbull Markets is a reliable choice if you're looking for a range of trading platforms. They cater to all types of traders with seven different options, including MetaTrader 4 and 5. They also provide educational resources for traders at every skill level.
Whether you're just starting out or already experienced, Blackbull Markets has the tools and information to support your trading journey.
In addition to their platform variety and educational resources, Blackbull Markets offers some impressive features. These include tight spreads with 0.0 pips, high leverage up to 500:1, and quick trade execution with an average speed of just 20 ms.
- Swift execution
- Zero pips spread
- Abundant educational resources
- Not accessible for U.S. traders
Pepperstone – Best for International Traders
Pepperstone provides an expanding selection of markets for trading, high-quality research, and assistance for various social copy trading platforms. It offers both MetaTrader and cTrader, and its extensive assortment of third-party tools and plugins further enhances its already remarkable range of available platforms.
- Extensive third-party copy trading options
- Competitive pricing for active Razor account traders
- Market selection lags behind industry leaders
- Lack of interactive courses, progress tracking, and educational quizzes
Our Ranking Methodology for the Best Copy Trading Forex Brokers
When it comes to assessing and ranking the top forex brokers for copy trading, we utilize a comprehensive approach that combines quantitative data analysis with the qualitative insights and expertise of our experienced researchers.
Our yearly reports encompass a wealth of in-depth research findings on the online forex brokerage industry, and we carefully examine the practices of various international regulatory agencies.
We extensively explore diverse copy trading platforms and services to determine the best brokers for copy trading.
We thoroughly analyze the copy trading features provided by online brokers themselves, meticulously evaluating the overall social copy trading experience they provide. Additionally, we thoroughly assess third-party providers offering copy trading services.
Our evaluation also includes examining the cost structure associated with these services. We differentiate whether these expenses are included in the spread or charged as separate fees or subscriptions.
We rigorously test these services across multiple platforms and devices to ensure smooth transitioning between self-directed trading and copy trading within each broker's offering.
We thoroughly test all the websites and online forex trading platforms we review by using the most up-to-date version of the Google Chrome browser. Our desktop computers are equipped with Windows 11, while we utilize MacBook Pro laptops running macOS 12.5 to assess the on-the-go copy trading experience.
Additionally, we conduct comprehensive tests of copy trading services on mobile devices, utilizing an iPhone XS running iOS 15 for Apple users and Samsung Galaxy S9+ and Samsung Galaxy S20 Ultra devices running Android OS 12 for Android users.
Best Copy Trading Forex Brokers – Buyer’s Guide
What Is a Copy Trading Software
A copy trading platform is software that allows beginner traders to imitate the positions taken by professional traders. This presents a great opportunity for brokers to increase their turnover, as it opens up new possibilities for anyone interested in the financial markets.
While experienced and successful traders can continue earning money weekly or monthly through trading on their own accounts, novice traders, those with less experience, individuals who prefer not to trade, or anyone struggling to make profits can simply copy the trades made by these successful traders.
The main advantage of copy trading lies in the fact that it takes away the burden of analyzing financial markets from individuals and transfers it to others.
This makes managing your own copy account and monitoring results much easier - you can even do so from your mobile phone!
How to Start Copy Trading in 7 Steps?
- Analyze performance rankings and statistics of diverse signal providers
- Choose a signal provider aligned with your trading objectives and risk tolerance
- Determine the allocation of your account balance for copying the provider's trades
- Refine risk management settings and decide whether to copy existing positions or new ones
- Initiate copying trades after configuring your preferred settings
- Regularly monitor your trading account's performance based on the trading frequency in your copy trading account
- Adapt your settings and subscriptions as circumstances change, like signal provider performance or market expectations
Top 5 Copy Trading Tips
- Look for signal providers with consistent performance rather than relying on absolute returns. Market predictions aren’t foolproof, so statistical consistency is key
- Analyze a broad range of performance metrics when evaluating a signal provider Consider factors like average profit and loss, number of trades, and trade duration
- Strike the right balance for diversification according to your investment goals. Copy trading allows you to integrate various trading styles and markets into your portfolio
- Factor in the expected investment duration when copying another trader. While historical performance may show consistency, keep in mind that their strategy can vary in terms of frequency and volume
- Get acquainted with your copy trading platform's risk management settings. Social copy trading carries risk, so tailor your risk limits and thresholds. For instance, customize the capital at risk for each copied signal provider
Does Copy Trading Really Work?
Indeed, copy trading is truly effective, and its efficacy can be confirmed by examining the achievements of the most successful traders. Similarly, there are instances where traders experience financial losses when engaging in copy trading.
The key to achieving success lies in selecting appropriate strategies at opportune moments, as well as allocating sufficient funds to each strategy, and establishing risk/reward thresholds based on individual requirements.
Although copying a trader with a proven track record or a history of positive returns doesn’t guarantee success, it does enhance the likelihood of generating profits compared to emulating a trader with subpar performance in their past endeavors.
Pro tip: Different copy trading platforms offer a wide range of tools for analyzing traders and managing risk. However, being aware of potential biases in the platform's database is important.
For instance, recency bias might influence investors to follow the trader currently performing well, even though this may not always be the best choice. Another factor to consider is strategy drift, which occurs when a trader deviates from their successful historical strategy and produces unexpected results.
To achieve success in copy trading, it’s crucial to conduct thorough research and stay updated on your account's performance. If copy trading proves ineffective for you, don't hesitate to intervene when necessary.
What Is an Example of Copy Trading?
After selecting the traders you wish to copy from the copy trading platform, you will assign a percentage of your account balances to each trader or signal provider for copy trading purposes.
For instance, if you copy a trader who purchases 100,000 units of EUR/USD currency, you will observe a trade of a similar proportion in your account based on the allocated amount. The trade size in your account may differ, either smaller or larger, depending on how you set up your initial subscription for copying each investor.
Pro tip: Once you discover one or multiple traders that you want to emulate on a copy trading platform, you must make the decision of whether to solely adopt their new trades or instantly replicate any existing positions they already have open.
It’s possible that there are additional settings available for customization - such as determining the maximum level of risk you are prepared to undertake for each trader copied - and other controls that can impact how your account is managed during copy trading (these can differ depending on the specific copy trading platform utilized).
In addition to selecting a trader with a commendable track record, it’s crucial to examine each system's performance statistics, including the level of risk assumed (maximum drawdown) and average trade size, duration, and frequency.
Some investors opt for more than one strategy; however, having adequate capital and making informed decisions about risk parameters (if applicable) are pivotal when copying forex strategies. Remember: copy trading entails risks. Never invest funds that exceed your comfort level in terms of potential loss.
Is Copy Trading Risky?
Indeed, there are risks associated with copy trading. Engaging in any type of trading within the financial markets carries inherent risk, and investments in forex and CFDs are particularly high risk regardless of the specific trading approach employed.
While some may argue that utilizing a copy trading strategy can potentially reduce risk compared to traditional self-directed trading methods due to the implementation of risk management measures by most system developers (such as stop-loss and limit orders), it’s crucial to understand that no signal providers for copy trading can guarantee consistent profits.
Can You Make Money From Copy Trading?
Investing in copy trading carries the same risks and potential rewards as any other investment. The key to your profitability lies in the selection of traders to follow and the timing of copying their trades. These two factors significantly impact your chances of making a profit or suffering losses.
Before deciding which trader to follow, evaluating their historical performance is essential. It's crucial not to be swayed solely by a trader's current success; past gains do not guarantee future profits.
The saying "Past performance isn’t indicative of future results" holds true in the unpredictable world of copy trading. Due to its inherent riskiness, investing only an amount you are comfortable losing is wise. Start with a small capital allocation and conduct thorough research before committing yourself fully.
By following these precautions, you can mitigate some risks associated with copy trading while increasing your chances for success. Remember that informed decisions and cautious investments are key when venturing into this field.
How Do I Choose the Best Trading System to Forex Copy Trade?
The most profitable trading system may not necessarily be the best one to copy. It’s essential to align your risk parameters with a strategy that aligns with your investment goals.
For instance, if you are a conservative investor, you might prefer a system with lower average losses per trade than average profits.
Conversely, if you are more aggressive in your approach, you might opt for a strategy with higher volatility, which comes with increased risks of losses but also higher potential profits.
In today's copy trading forex platforms, numerous signal providers are available – sometimes even hundreds or thousands. This abundance can make it challenging for traders to determine who they should follow.
Therefore, it’s crucial to conduct thorough research and start by investing a small amount before committing larger sums of money. Remember never to risk more than what you are comfortable losing.
Remember that when citing sources like books or individuals in your writing, it’s important not to rephrase text within quotation marks simply.
Is Copy Trading Good for Beginners?
Copy trading can be beneficial for novice traders as long as they take the time to understand the fundamentals and approach it with the same level of caution as any other self-directed trading account.
It’s recommended that beginners start with small trades before moving on to larger amounts, and it's wise to familiarize themselves with the software through a demo account prior to engaging in live trading.
It's important to emphasize that copy trading requires active management of one's account—it’s not a quick solution or an effortless way to make money. Instead, think of copy trading as a tool that complements your existing portfolio and aids in your overall trading strategy.
The suitability of copy trading will depend on your personal preferences, goals, and risk tolerance. You must establish specific risk/reward parameters and determine maximum drawdown thresholds. Additionally, you'll need to choose which providers you want to emulate (if any).
Is Copy Trading Legal?
Using automated software to mimic the investment decisions of skilled traders or investors is known as copy trading.
This method has gained significant popularity in recent years due to its convenience and track record of producing favorable outcomes. Copy trading is generally deemed legal in various countries, including the US and UK.
While regulations may vary slightly between nations, they primarily aim to ensure that investors are aware of the risks associated with this form of trading.
However, there are currently no bans or restrictions on utilizing copy trading applications. As long as all regulations are adhered to, investors can readily reap its benefits without any impediments.
Copy Trading & Mirror Trading Differences
Mirror trading and copy trading may seem alike, but there’s one key difference: mirror trading replicates the entire strategy without any human involvement or interaction with traders. On the other hand, copy trading allows copiers to handpick specific traders to emulate, and modify copied trades as they see fit, and enjoy greater overall freedom in their investment decisions.
Mirror trading is better suited for experienced traders who have larger portfolios. It involves the collaboration of numerous traders and encompasses a broader range of macroeconomic data. On the other hand, copy trading focuses on following a single trader and is a preferred method for individual traders.
Copy trading is the ideal option for retail traders who operate with much smaller volumes compared to professional traders. While retail traders may execute trades with just 100 units, professional traders start from 10,000 units and above, necessitating a larger amount of capital.
Institutional & Retail Clients
Mirror trading first originated among experienced traders, whereas copy trading became popular among online brokers who primarily serve retail clients.
Best Copy Trading Forex Brokers – Frequently Asked Questions
Is Copy Trading Really Profitable?
Certainly, the method of investing and trading can be profitable if executed correctly. As of 2021, it’s considered one of the most lucrative approaches. The expected range for profitability falls between 5% to 20%. Top-notch applications offer features that promote transparency by showcasing investment returns, risk assessment, and the reliability of professional traders who provide trading signals.
Is Copy Trading Good for Beginners?
For newcomers, this is the perfect solution. It enables beginners to imitate the investment techniques employed by seasoned traders without much difficulty. Additionally, it appeals to busy professionals who are unable to dedicate time to devising their own trading strategies or simply prefer not to do so.
As a result of utilizing top-notch copy trading platforms that offer automated copy trading services, this approach is particularly advantageous for generating passive income without consuming a significant amount of your time.
Can I Stop Copy Trading at Any Time？
Certainly! You are able to exercise your freedom to halt copy trading whenever you please. It’s within your control to either terminate the copying of a specific signal provider or close any trades that have been copied.
Final Thoughts – Best Copy Trading Forex
Copy trading is particularly advantageous for traders interested in short-term trading or with limited time to stay updated on market trends.
By evaluating and filtering traders with a proven history of success, copy trading portfolio management software offers new and experienced traders the opportunity to benefit.
It’s crucial for individuals to carefully analyze and study each platform that provides the copy trading feature, ensuring that they’re well-regulated and suitable for their specific needs.
Working with certified, reliable brokers who undergo thorough monitoring processes is advisable for beginner traders.
Disclaimer: The above is a sponsored post, the views expressed are those of the sponsor/author and do not represent the stand and views of Outlook Editorial.