What Is Copy Trading and How to Do It

By AdsPower

A warm bed on a winter night. A cup of hot frappuccino. And peace of mind.

Sounds amazing right? But you know what feels more serene than all of this? Trading without expertise in a specific market—that’s copy trading for you.

Copy trading sounds too good to be true. For beginners, it’s a dream come true. All you have to do is just mimic the moves of market masters.

The market size for copy trading was approximately $2.2 billion at the end of 2021.

But hold on!

Is it a shortcut to riches, or is there a hidden catch? There's more to the story than meets the eye.

In this blog, we'll explore what is copy trading and some pros and cons of this popular strategy.

We’ll also talk about how to copy trade wisely (caution included!). So stay along and read.

What is Copy Trading?

Copy trading or mirror trading is a trading strategy where individuals mirror trades of experienced traders.

This process allows novice investors to benefit from the expertise of master traders.

In a copy trading setup, there are two main parties.

1) The "leader" or "signal provider," is the experienced trader.
2) The "follower" or "copier," who replicates the trades. Followers can choose a leader based on their performance history, risk level, and trading strategy.

That’s not it. The markets covered by copy trading include forex (foreign exchange), stocks, and cryptocurrencies.

Copy trading is typically done through specialized platforms that automate the process, although manual methods also exist.

Specialized platforms make it easy for followers to connect with leaders, track their performance, and automatically copy their trades.

After learning what is copy trading, it’s time to get down to business and learn how to do it.

How To Copy Trades?

Copy trading simplifies the investment process by allowing one trader to broadcast their positions to others on a network.

Then, other traders can choose to acquire these positions either manually or through automated trading platforms (we will talk about it below), without requiring additional input.

This requires less experience but gives out more benefit from the expertise of more skilled investors.

Let's dig into some steps and learn how to copy trades.

1: Choose a Copy Trading App

Look for one that offers user-friendly features, reliable performance data, and access to the markets you’re interested in (forex, stocks, crypto).

For example, if you’re in crypto trading, Binance allows you to do copy trading.

2: Create an Account

You’ll need to provide personal information and complete any required verification processes. Make sure your account is secure with a strong password and two-factor authentication (2FA).

3: Deposit Funds

Deposit the amount of money you’re willing to invest into your trading account. Different platforms have different minimum deposit requirements, so check the specifics for your chosen platform.

4: Explore and Analyze Traders

Analyze their performance history, risk levels, trading strategies, and reviews. Look for consistent performance over time rather than short-term success.

5: Choose a Trader to Copy

Select a master trader whose strategy aligns with your investment goals and risk tolerance. Many platforms allow you to filter traders based on various criteria such as profitability, risk score, and trading style.

6: Allocate Funds

Decide how much of your capital you want to allocate to copying the chosen trader. Platforms typically allow you to adjust the amount, so you can diversify by copying multiple traders if desired.

7: Start Copying

Activate the copy trading function. Your account will automatically mirror trades made by the selected trader in real time. Monitor your account regularly to ensure the trades align with your expectations.

8: Monitor and Adjust

Most platforms allow you to stop copying a trader or adjust the amount invested at any time. Stay informed about market conditions and be ready to make changes if needed.

With these steps, you can start copy trading effectively and potentially benefit from the expertise of master traders.

The Best Copy Trade Platforms

Based on hands-on experience we have short-listed some of the best copy trading platforms and apps out there, along with their unique features and tools.

1. eToro

What Is Copy Trading and How to Do It

eToro offers a solid social trading network and a copy trade app where users can interact, share insights, and follow successful traders.

eToro’s copy trader feature allows users to replicate the trades of top-performing traders automatically.

eToro supports trading in stocks, cryptocurrencies, forex, and commodities.

The platform is designed to be intuitive and easy to use for beginners.

Notable Aspects: eToro provides a comprehensive educational section that helps new traders understand market dynamics and strategies—for many it’s the best copy trade platform.

2. ZuluTrade

What Is Copy Trading and How to Do It
ZuluTrade allows for automated copy trading based on the strategies of experienced traders.

The platform offers detailed performance metrics and rankings of traders and helps users make informed decisions.

Users can create custom portfolios by selecting multiple traders to follow.

Advanced risk management tools help users control their exposure and manage their investments effectively.

Notable Aspects: ZuluTrade integrates with multiple brokers, and offers users flexibility in choosing their preferred broker.


What Is Copy Trading and How to Do It

NAGA's copy trading feature lets users copy trade stocks, forex, commodities, indices, and cryptocurrencies.

It also features a built-in cryptocurrency wallet that facilitates seamless transactions and storage of digital assets.

NAGA includes social features like a news feed and community discussions to enhance user interaction and learning.

Notable Aspects: NAGA also offers a unique reward system, in which users earn tokens and bonuses for their trading activity and engagement.

4. MetaTrader (with Copy Trading Plugins)

What Is Copy Trading and How to Do It

MT4 and MT5 are renowned for their advanced charting tools, technical analysis, and customizable indicators.

Users can add copy trading plugins to enable automated trade replication.

The platforms support automated copy trading strategies through Expert Advisors (EAs).

MetaTrader’s large community of traders and developers provides numerous resources, forums, and third-party tools.

Notable Aspects: MT4 and MT5 are industry-standard platforms, widely respected for their reliability and versatility.

5. Darwinex

What Is Copy Trading and How to Do It

A proprietary feature that allows users to invest in DARWINs (Dynamic and Risk-Weighted Investments), which are trader strategies with unique performance metrics.

Darwinex places a strong emphasis on risk management by offering advanced tools to protect investor capital.

Its detailed analytics and performance evaluations help users choose the best strategies to follow.

Darwinex operates as a regulated broker that provides an added layer of security for investors.

Notable Aspects: Darwinex's unique DARWINs approach offers a sophisticated way to invest in trader strategies, with built-in risk management and performance optimization.

Each platform has its unique strengths, which makes them suitable for different types of traders and investment strategies. Make sure to do your research to decide which is the best copy trade platform for you.

Benefits of Copy Trading

Sure, copy trading is easy, and we have all these amazing copy trading platforms, but is copy trading profitable?

Let’s answer this with a counter question.

As a beginner investor, do you have more chances of success by placing blind trades with no expert assistance or by copying a master trader with an 80% success rate? Hands-down, the latter has more chances of winning.

Now let’s explore some other benefits of copy trading.

1. Easily Accessible: Copy trading pushes beginners to start trading without extensive knowledge or experience. Copy the trades of experienced traders, and newcomers can learn and potentially profit at the same time — isn’t it amazing?

2. Time-Saving: For those with busy schedules, copy trading eliminates the need to constantly monitor the markets and make decisions. Simply choose a successful trader to follow and let their expertise work for you.

3. Diversification: Copy trading enables you to diversify your investment by following multiple traders, each with different strategies and assets, plus reducing the overall risk.

4. Learning Opportunity: Observing the strategies and decisions of seasoned traders can be an educational experience. It also provides insights into lucrative trading techniques and market analysis.

Disadvantages of Copy Trading

Let’s be honest, not a single financial decision is risk-free especially when you’re talking about the trading industry.

So it goes without saying that the copy trading strategy also has its due share of risks. Here’s a few potential disadvantages of copy trading.

1. Lack of Control: When you copy trade, you relinquish control over your trades to another trader, which means you depend heavily on their decisions and strategies.

2. Risk of Following Poor Traders: There's always a risk of choosing traders who may not perform well, which can lead to potential losses. It's crucial to thoroughly research and select reputable traders to follow.

3. Fees and Costs: Some copy trading platforms charge fees or commissions, which can eat into your profits. It's important to understand the cost structure before committing to a platform.

4. Complacency: Relying on copy trading might lead to complacency, where traders do not develop their trading skills or market understanding, which could be detrimental in the long run.

An Alternate Way to Earn in Crypto Trading!

While this article simplified what is copy trading, there are some ways to earn crypto for free too. Those strategies require little to no investment and rewards you crypto based on your activity.

To maximize your profits using those strategies all you need is to have multiple browser profiles as just one browser profile doesn’t get you a good amount of crypto. However, multiple browser profiles can get banned if the project distributing free crypto detects them coming from the same source.

This is where AdsPower gets useful. AdsPower is an anti-detect browser that allows making multiple browser profiles while staying anonymous. To avoid detection it uses advanced techniques that prevent websites from profiling and thereby blocking you.

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What Is Copy Trading and How to Do It