Online trading is a very popular way to earn money. There are a lot of strategies and styles. The copy-trading style is increasing in popularity from year to year. This is because the markets are growing and many new investors enter them. However, because of a lack of experience, they might not be experienced in building their own strategies. That’s the reason why they prefer copying others’ trades through special platforms.
If you are interested in this style, you can either explore the top 3 copy trading strategies or examine our guide and learn how to create your own strategy.
Before we get down to our recommendations for beginners in copy-trading, let’s review why you should even consider this approach.
- You can diversify the risks from the long-term perspective. Whilst copying one strategy, you can come up with another one to diversify the risks. This way, profits from one side will cover the losses caused by the opposite one.
- Copy trading is easy. Often, this approach is referred to as the best way to start trading online. Plus, there are a lot of reliable brokerage services offering efficient copy-trading solutions for beginners.
- You can become a better trader by following participants with more experience. You follow advanced platform users and based on their insights, you can learn in real conditions about the things that work and which don’t. This can bring success in the long run.
- There is a big diversity of copy-trading strategies to choose from. Building your own efficient strategy is a complicated challenge that requires specific knowledge and skills. With copy-trading platforms, you can explore a huge diversity of existing plans and pick up the most profitable ones. Maybe, some of them will inspire you to make your own strategy better in some respects. Besides, if you see that one strategy shows poor performance, you can easily switch and start copying another one.
- Following other traders is a way of making passive income. When you choose to copy trades, they will be copied to your account automatically. Instead of creating your own first strategies, you can take this time to learn from existing approaches. At the same time, you might even have good gains.
Create a trading account
Do you believe that these benefits are enough to motivate you to start copy trading? If yes, you should start from the very beginning. First of all, find a reliable brokerage service of an exchange offering a copy-trading platform. Open your real trading account there. We suggest that you should choose solutions with simple interface features.
If you are unsure that a certain platform will suit you, start with a demo account if it’s possible. Examine the diversity of active strategies, and study whether additional indicators and risk management tools are available.
Trading is all about learning, so don’t be in a hurry when creating your first real account. See how many investors share their strategies and take a look at how they perform. Once you finish with this step, get to the following one.
Copy from the most efficient
In copy trading, your success directly depends on the performances of the traders you decide to follow. That’s why you should first figure out whether they are verified and for how long they’ve been sharing their strategies on the platform.
How do you know if a trader is efficient? Actually, many depend on the functionality of the copy-trading platform. The most advanced ones offer special filters that help to sort out participants that haven’t been profitable over the passing year or over another specified period.
The common mistake of beginners is that when they find efficient traders, they forget about everything and start following them without taking anything with a pinch of salt. Stay sober-minded and learn how to assess the upcoming risks that might be non-beneficial for the strategy you decided to follow.
One more tip you should follow when choosing a trader to copy is that don’t fall for hackneyed participants. An efficient trader should be resilient and flexible to new challenges. Check how many assets they invest in and how they react to different market changes. A good copy-trading platform should provide you with this information.
To summarize, copy-trading is a good way to make money online. Nevertheless, we suggest that you should take some time and pay an effort to benefit from this style. Good luck!
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