For traders or traders, the term copy trading is certainly not foreign. Because many of them have started doing these activities. But if you are a beginner and don’t know what it means, be sure to watch the following explanation of is copy trading profitable:
Get To Know Copy Trading
According to its name. This activity is generally done by imitating the actions of other traders. This can be done by using a social trader platform and taking advantage of the network of traders in it.
In own copy trading activities. You can also select specific actions. In other words, although this one activity works automatically. However, you as a user can choose some actions that you think are much more profitable.
By utilizing this one trading system, of course, even novice traders will benefit more. Because they can get higher profit opportunities, even without having to do any analysis at one of the well-known ironfx brokers.
Advantages Of Using A Copy Trading System
In addition to the convenience mentioned in the section above. Using this one system can also give you many other advantages. As well as some of the following advantages:
1. Little Risk
Because this one activity is a reflection of the trading strategies carried out by top traders. Of course, even beginners can reduce the risks that must be faced more easily. He can also rely on the knowledge of people who are experienced in it. 2.
2. Learn To Trade Easily
The process of learning to trade is quite difficult. It may even take a long time for you to understand it properly. With the media in the form of a trading platform and also the best copy trading system, of course, investment activities can be learned easily.
3. Expand Adoption
By reducing the risk as previously mentioned. The expansion of adoption will certainly run more easily. It also helps in building trust in the trading field itself.
4. Expert Traders Can Earn Commissions
Other advantages are also obtained by previous traders or professionals. Because they can get a commission from every action imitated by other traders. This is profitable, mainly because it can increase income from daily activities that it can do.
Which Type of Copy Trading is Best?
Several types of copy trading are often done by traders in general, all types or methods of copy trading are all the same, namely copying transactions, but when compared, which one is the best and has the lowest risk.
Copy Trading is divided into two types, namely Manual and Automatic. Sometimes we forget that we often do copy trades, whether it’s looking at other people’s analysis, looking at position entries in the trading group, or the signals given by other traders.
Copy Trading Manual
Copy Trading manual is usually done in a group or trading community, commonly called Trabar which means Trading Together. So all members of the group can follow the existing signal, but this method is less effective if the group members are not always active/online because they will miss the moment.
Automated Copy Trading
Automatic Copy Trading is divided into 2 again, namely Copytrade using Robots (EA) and Without Robots. If without a robot, where will the transaction data be taken from? Yes, of course, this is taken from the MetaTrader server directly, no longer between robots or EAs (Expert Advisors).
Copy Trading Robot
Copy Trading robots are the most common type of copy trade, why? because of the low price and easy operation, this type of copy trade requires a stable VPS to operate the copy trade robot for 24 hours.
This type of copy trade also has a high risk of failure, because it has a fairly high “delay” even though it can be seen as fast when compared to copy trading without a robot. Not to mention that copy trading through this robot must have sufficient VPS specifications because to be able to do copy trades through this robot, you are required to install two MetaTrader installed in the same VPS.
Tips for Investing
Be selective in choosing the traders you will follow, and pay attention to the use of lots, money management, and the length of trading.
Professionally arrange lots so that your capital will be safer later because in use it adjusts to the capital you use.
Be verified when choosing an expert trader that you will follow, because choosing a few really good traders will reduce your losses later.
Copy Trading Risks to Pay Attention to
1. Losses cannot be evaluated – The first risk is the loss in this type of social trading which cannot be evaluated because traders are simply copying other people’s strategies. Master trader strategies can indeed be evaluated, but of course, they cannot be as deep as evaluating trading losses caused by their strategy.
Another consequence of this non-evaluable loss is the undeveloped skill of the copied trader. This is because strategy evaluation is important for developing further strategies.
2. Technical risk – Another risk is technical. Some master traders complain about this because, due to the technicalities of the applications they use, the transactions they make are losing money and traders copying the strategy flocked to ask for an explanation from the master trader.
Keep in mind that technical strategies such as data that are not real-time or application crashes are not the master trader’s fault, so it’s best if the master trader reveals technical problems like this, the copyist immediately asks the relevant application provider.
3. Emotional risk – As written in the results of the research above, master traders are vulnerable to the disposition effect. This is because if the trade is losing money, the master trader will be questioned by copying traders. This will certainly make the experienced trader’s emotions depressed. Not to mention the fact that this kind of thing is not assisted by the copy trading service provider.
This suppressed emotion can lead to decisions that are less logical and can be justified.
Wrapping Up
From the brief explanation above, you can see that the copy trading system can bring many advantages. Especially for novice traders. But you also have to be careful, because it also comes with some drawbacks