Copy trading is growing swiftly among the community of South African traders. They are realising the significance of the methodology and making returns through it in the financial market. Copy trading is precisely reflecting the best moves initiated by the best traders or investors in the market that are conducive to your strategies. You can copy positions automatically and start trading in the financial market.
In copy trading, the positions managed and opened by other individuals can be copied by you for better profits.
What is copy trading?
Copy trading is considered one of the branches of social trading. Here, the position initiated by one person is copied by another trader’s account during the phase of entering and exiting. It can be manual or automatic, depending on the need of a trader. Moreover, it is up to the need of an individual to decide which way to approach the market.
However, a trader needs to analyse the market and position before committing the funds to a trader’s position in copy trading. Once it deems fit, then only he/she should entertain the idea of putting real capital.
Moreover, you should remember that despite following the footsteps of a veteran trader, you may still lose your funds.
All trading actions such as ‘take profit orders’, assigning stop-loss, closing a position etc., also get executed in the account of a copy trader. It happens as per the proportion between allotted copy trading funds by the copying trader and copy investors’ accounts.
The copy trader has the ability to manage copied trades on his/her own. Furthermore, they have the option to close the copy relationship entirely. Thus, at the current market price, all copied positions can be closed.
Understanding copy trading: How does it work?
Copy trading is extremely reliant on social trading systems and social networks. Every trader has the opportunity and power to tell another after opening a position in the security of different assets. The information and knowledge can be broadcast easily through the network. Other traders have to decide to replicate the strategy or make one of their own.
Moreover, there’s another option where automated trading systems can do that without seeking any input from the market player.
More often than not, primary traders who broadcast the information in the financial markets have considerable experience in trading various instruments and assets. However, copy traders lack experience in a specific market. Also, it can be a possibility that they may not have tried their hands in financial trades earlier.
Meanwhile, copy investors are also known as signal providers or leaders. They get compensated through monthly subscription fees that a trader pays, who is seeking to copy trades as a follower.
Additionally, popular investors have a chance of receiving a 100 per cent spread rebate on transactions. The reward schemes trigger traders to allow others to witness their trading and copy them instead of trading privately. Thus, the option of monitoring stimulates copy traders to seek the same idea while entering into trading any product or instrument.
Today, copy trading is opening new ways of creating an investment portfolio. Some industry insiders and learned veterans call it people-based portfolios. The development has led to several enthusiasts entering the financial market, which is giving a required push to the world economy.
Interestingly, people-based portfolios are different from traditional portfolios. Here, the funds are not invested in traditional market-based instruments.
Copy-trading can influence the market
If you are a trader in South Africa, knowing about the behaviour and influence that copy trading can inflict is pivotal. The key features available with it influence imitation directly and indirectly.
It enables traders to copy others’ trades directly. You have to click a button and imitate it all within fractions of seconds. On the other hand, it can be done indirectly by getting the information and performance that can enable users to replicate in the live market.
However, some experts argue that imitation can lead to risky decision-making. When the market is fluctuating or showing signs of immense volatility, copy-trading can be dangerous. Thus, it also requires timing. If copy traders can get the timing right, profits can be bettered.
So, copier traders need to put in some acumen while copying because mindless copy can lead to heavy monetary losses.
It proves that efficient traders are not those who are well-read but also who know how and when to take risks.
The risky investment strategies get the maximum rewards but also test the patience of a copy trader. Thus, one has to have the nerves of steel while putting their funds that way in the market. Moreover, the sentiments of primary traders get magnified by the copy trader. So, if the market is going bulls, copy trading would push prices further. And inversely, when the market goes bears, it will be further pushed to the abyss.
So, there are two extremes to it. Hence, one has to be cautious about which trader to pick while indulging in copy trading.
What to do before starting copy trading?
Before initiating any trading types or investing in the financial market, research is vital. You need to do your own research that will help you clear all doubts. It is good for those who are unfamiliar with the concept of trading.
Also, the asset you want to trade using copy trading should be known by you completely. Fundamentals are important to acknowledge about potential gains and losses. PrimeFin broker can come in handy while learning it. You can find several articles and course materials that can help you become accustomed to trading.
Additionally, you can get help with resources, and that can speed up your trading quotient.
How to start copy trading?
Copy trading is not a mindless job. A trader should be smart enough to know what can harm his/her funds and what is beneficial. So, as a copy trader, one needs to follow the following steps:
- Research all possible financial markets and know them all. It is important to see the pros and cons attached to each of them. Every one of them has a different method, features, elements, characteristics and application in the financial market. So, copy traders need to know it all. Finally, specialising in any one asset or instrument is essential.
- As a copy trader in South Africa, you can choose PrimeFin financial service provider that packs all elements and features required by you. As a subscriber, you can look around and pick up the best options offered by the brokerage firm.
- After getting satisfied, create an account. The process of registration is swift and easy. You have to provide personal details that may include your name, address, phone number, email id and documents for verification. Moreover, for KYC, the website may seek some additional information that you can offer them willingly. After that, you can fund the account using a debit card, credit card, or bank wire transfer.
- You can select a social trading board for copy trading.
- As a trader, you can copy the trades from the trading platform and open a similar position. However, do not forget to manage your risks by applying stop-loss limits.
- You should monitor your position until your objective is met and once that happens, close it.
How to do copy trading successfully?
There’s always a method to the madness. Copy-trading requires partnering with an asset or product that they feel deeply connected and comfortable with. That’s important because, without camaraderie, profits will fade away into oblivion.
For successful copy trading, the power of monitoring and observation is important. Check the market and those traders you want to copy your trades. Watch them for a while and after getting convinced, pick their positions after seeing the best time for investment.
But before that, see the risk-profit profiles and ensure how much you are willing to give away and save funds to re-invest. One must know that copy trading does not mean going blind while copying trades or positions of opening and closing from an astute and experienced trader but also knowing when to apply that.
Why did copy trading become successful?
The reason copy trading became successful early on was because it garnered heavy profits for copy traders. However, some may argue that may be a fluke. But a coincidence may occur once or twice, but the formula gained popularity because people also applied their strategies and timed their steps.
Moreover, with time, they boosted their trading skills that catapulted into profits. Thus, it sprouted profitability several times. So, copy trading sub-consciously teaches copy traders to apply different plans in various markets. It is like a chess game; the more you practice, the better you get with time, even when you observe your opponents.
So, copy trading not only benefits copy traders monetarily but also impart lessons on which steps to initiate while trading in distinct financial markets with myriad conditions.
That’s the part of successful copy trading.
Through copy trading, novice traders can adopt the skills of veterans and implement them in their market situations to beckon profits.
However, the successful way of copy trading is to do everything that the astute traded did in a similar situation or circumstance. Here, you do not require to analyse the market or reach out to indicators for entering or exiting the market. Thus, mere replication would do the job. However, if you must make any adjustments, it is better to learn some tricks of the financial market.
Also, one should learn to use other traders’ abilities and make full use of them. It can increase the success rate exponentially and reduce the chance of losing funds. A trader who wants to learn and grow in the financial market will always pay attention to the techniques.
Rise of copy trading
The concept of copy trading rose due to the profitability that traders looked into it. Moreover, their work got smarter than complex, and with a few adjustments, profits got bigger. Also for who does not want to earn better with fewer efforts? Copy-trading provides the platform for copy traders to use tried and tested veterans who have made it big using their strategies.
The rise of copy trading has happened following the mouth publicity. It has taken off a load of several novice market players, and despite lesser or no knowledge, they earned significant amounts of money.
The copy trading market has witnessed explosive growth in the past 5 years. However, you cannot ignore the significance that one needs consistency to have faith in a method. Copy-trading has delivered time and again to traders who reposed their trust in it.
Also, copy-trading is not just for inexperienced or new traders. Several experienced traders use it for the research purpose of getting to know their competition well. So, that’s another way that is leading to its popularity in the financial market.
It saves time for market participants, and they are creating strategies after taking ideas and learning from their compatriots. Moreover, that strategy is proving to be profitable.
Copy-trading in South Africa is a rising phenomenon that lets traders learn and grow their wealth in huge proportion with a tried and tested method. So, the risk gets lesser, provided you use a broker like PrimeFin that has all elements one may need to grow in the financial market. Moreover, you have to be a master observer and know how to imitate trades to perfection, allowing you to enter and exit the market precisely.
- It provides 1:100 leverage
- Swap discount is available
- Free education hub
- Dedicated customer service
How risky is copy trading?
Every trading that people indulge in comes with a certain amount of risks that may cause losing some investment, likewise, in copy trading. A trader should be ready to face some lows. However, chances here are quite less because the strategy is tried and tested by veteran traders. Hence, it is one of the profitable avenues of earning money.
Is Copy trading legal?
Copy trading is legal in several countries. Thus, it is a legitimate way of making money and far less risky for traders. You copy others’ trades successfully and earn money. Moreover, every regulatory body approves of the process. Hence, traders can find it lucrative where other person’s strategies can benefit them.
Is Copy trading profitable?
Yes, it is tried and tested method. Thus, anyone who longs for copy trading should try it for making gains. It has achieved massive popularity in recent years, and trading using the techniques has made good money. So, when you use copy trading, ensure you copy the trades from a learned and experienced trader.Open account