Five Reasons Beginners Should Use CopyTrading

Undoubtedly, the foreign exchange (forex) market is one of the largest global financial markets, amassing over $6.6 billion in trades daily. Currently valued at over $1 trillion, the forex market is larger than the equities market and witnesses major transactions take place in some of the world’s major currencies, such as the dollar, euro, and even the pound.

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This global financial system has drawn a lot of attention from various individuals, and for many reasons too —chief amongst them being the desire to make a profit. However, the forex market is also known for its high volatility, which makes it a financial market that requires a wealth of experience, coupled with determination and perseverance. This led to the development of a trading strategy known as copy trading for greenhorns in the financial market.

History of CopyTrading

Copy trading goes back to 2005 when traders began to imitate specific algorithms curated through automated trading. This was seen as a great potential, where systems could be linked to a trader’s profile and automatically copy the account of such a trader. This led to the development of many social trading applications, such as the Mtrading platform as foremost global trading app that enables its traders to copy trade, simplifying the act of the often-complex process of trading. According to recent reports, many social trading platforms have been predicted to witness growth to over €70 billion by 2025, with an annual growth of 48%.

From the above, it is easy to decipher the concept of copy trading. Copy trading, therefore, signifies the methodology of identifying seasoned traders that possess a healthy track record in their trades and imitating their trading actions. This technique encourages newbies who are particularly reluctant in engaging in the forex market due to its volatility, for fear of accruing losses.

Trading platforms adopted this strategy to ease many beginners into the financial system, further granting such beginners a host of vital product offerings, including currencies, stocks, commodities, and indices trading. This article, therefore, will look at the various reasons why you —as a beginner— should adopt copy trading as a strategy, further providing insights on the necessary steps to copy trading, and how the entire process of copy trading works.

Reasons Why Beginners Should Use Copy Trading

There are various reasons why a beginner should adopt copy trading as a technique in the forex market. These include:

Learning Curve

Trading commodities and currencies in the forex market may prove particularly daunting for beginners, which makes the entire process of understanding the marketplace a steep learning curve for new traders.

Copy trading, therefore, provides an effective way of learning about the fluctuations in the forex market. You see your account copying the trades of more successful traders in real-time, further proving helpful in understanding charts and when to enter buy or sell under certain market conditions.

Time-saving

Another reason for you to use copy trading is that it saves a lot of time. Trading is a full-time job that requires long hours and dedication to keeping up with the news, opening and closing deals, checking the markets, and more.

However, not everyone undertakes trading as a full-time role. This is where copy trading comes in to help not just a beginner, but even skilled investors. This technique allows trading enthusiasts to delegate this time-consuming task to others, through an automated system and births an opportunity for a secondary income.

Portfolio diversification

Diversification of one’s portfolio is where one’s money is invested in a diverse array of asset classes and societies, which further lowers the overall risk of such a portfolio.

The same applies to copy trading. You can imitate various traders simultaneously with this technique, spreading out your risk by using little funds across each trade.

Source of passive Income

One of the rare techniques that allow for a win-win situation, copy trading ensures that profit is made while only requiring little effort.

Traders investing in this technique are offered ample time to study the best strategies and earn money while doing so, proving itself as one of the most effective methods for making that extra income.

Helps you to avoid common mistakes

Finally, as a new investor, you are bound to make avoidable errors in the early stages of trading. These errors are taken care of by copy trading, as you allow established investors to make the decisions for you in cases where you may have wanted to use rookie instincts and emotions to trade.

Steps To Copy Trading

Choose a trading platform/trader

The first step is to, of course, open a trading account on copy trading software like ProRealTime Mtrading, a regulated and licensed forex broker, thus, guaranteeing that your money is in safe hands. Although, there are various reasons —after opening an account— that may influence a newbie’s decision in deciding which trader to follow. For instance, a trader may decide to follow a particular trader to analyze the various patterns of trading, while some other traders may follow the techniques of seasoned traders to make profits.

Create a budget

The second step in copy trading is to decide on the amount you will invest with. This amount should be a financial decision that does not impact long-term finances. In other words, you should be very comfortable risking such an amount of money. As a beginner, investing your entire savings will not be in your interest, because as earlier aforementioned, the forex market is known for its high volatility. Take a small cut of your income or savings that can be easily disposed of and use it to invest.

Don’t be too passive

The final step is to keep an eye on your account. Even after following the investor of your choice, you should not neglect your trading portfolio. In cases where your plan to broaden your knowledge of trading techniques, you can manually copy the trades of your preferred investors and do the buying and selling of currencies yourself, as opposed to automatically copying such trades.

Conclusion

In conclusion, the copy trading strategy is a very effective method that ensures minimum risks are taken, especially for new beginners. And with various forex copy trading platforms like Mtrading, trading in the forex market has never been more seamless and smooth.