The primary goal of trading in any market is making profits from the favourable fluctuations in prices of trading instruments. Trading can be defined as the simple process of buying low and selling high, but making consistent profits from trading is not that simple to essay the least. Each market has a set of trading instruments that are peculiar in nature and tend to be volatile as a result of various factors. Predicting the next price level accurately is what gives us an opportunity to profit in trading. This calls for a perfect combination of extensive knowledge, skills and a solid strategy.
Those who are lacking in any of these still get a chance to make profit with copy trading. But is copy trading actually profitable? We will be finding a truthful answer to the same with this brief review of copy trading.
What is copy trading?
Copy trading is a self-explanatory term as it is a way of trading in which you simply copy another trader instead of trading yourself. The concept of copy trading was introduced with the intention of making the trading space more inclusive for all types of traders, including total newbies without enough knowledge or experience. They get to minimise the risk of loss by copying the trade positions of another trader who has enough expertise in trading. Beginners can also skip the time consuming learning process and start trading with ease.
How does the process of copy trading work?
Now, let’s understand the process of copy trading and how it works. First of all, you need to join a copy trading platform that lets you trade by copying another expert trader of your choice.Then, you choose a trader to follow from the list of top traders available for copy trading. You need to make sure the traders you choose have a proven track record of success and also have the same risk appetite as yours.
Most copy trading platforms will let you see the trading history of the top traders along with other details like max account drawdown, return on investment earned by them and more which can be used as a criteria for choosing the best traders for yourself. Most of these platforms work with trading automation which allows you to trade in a hands-free mode.
The trade positions of the traders you choose to follow will automatically get copied or mirrored to your trading account in real time. You won’t get much control over the process of trading as the core concept of copy trading is to trade without trading on your own. This gives you an opportunity to make profits with minimal effort, especially when manual trading is not your forte.
Profitability of copy trading
Coming back to the question that we need to find an answer for, profitability of copy trading depends on various factors such as the platform you choose, the traders you copy and your own risk management skills. However, with proper planning and regular monitoring of account performance, one can surely move in the direction of success with a copy trading solution. But it is a fact that the end results of trading does not have anything to do with the past performance of the traders you select for copy trading.
In short, we could say that copy trading can be a profitable venture if done properly with a careful assessment of the risks and rewards associated with it. So, take your time to learn more and then proceed with copy trading to mark a successful beginning to your trading Journey.