Trading the forex market can be a very profitable undertaking if you know what you are doing. To succeed in trading, one must have the proper skillset and information surrounding currency rates which are never always available.
At some point, it will come to your attention that there is another way of making money through forex trading without learning how to trade yourself or getting all your information on currency prices out in the open. If this has breached your thoughts before, I am sure it will bring up curiosity about this so-called copy-trading option.
What is Forex copy trading?
Forex copy trading is a relatively new technique in the forex world. Here, instead of an experienced trader making his trades using their experience and knowledge, this job has been delegated to other traders who have already succeeded in the market. This means that by following them, you can make money without actually having any experience in forex trading.
This method of trading forex works by copying the trades of other traders regularly from a range of different sources, mostly from social networks such as Twitter and Facebook. In this way, it becomes possible to follow the moves of real traders who have already been successful in their investments without having to learn everything yourself first before you even get started with your first trade.
Some services allow you to do this, including eToro, which was one of the first platforms available on the market for doing this kind of thing. So how does it work exactly?
How does Forex copy-trading work?
For someone to become successful in forex, one has to understand the market and the different currency prices. Having several years of experience is very desirable, and taking courses or getting an education in this field.
We can’t expect everyone who invests in forex to be an expert on currency rates, so this platform allows people without any knowledge to copy trades from those who know how it works. It does not only make trading more accessible for beginners, but it also allows investors with limited funds to make as much as possible out of their investment as long as they follow the right traders’ moves.
What are its advantages?
There are several pros to this service but two essential ones which demonstrate best the benefits of such a service: convenience and safety (or lack thereof). Some people simply do not have time to trade their accounts every day; they might be busy with work or life events.
However, they still want to invest some money into forex because it is a lucrative market. In this case, a copy trading account can be a lifesaver because they do not have to trade to see their funds grow. The second advantage, which is even more important, is that it mitigates the risk factor when trading forex. You are only investing in already tested traders who have been successful in the past. In other words, you might lose your money if you trade on your own but chances of losing your investment when following a good trader are minimal; furthermore, these professionals make sure to diversify their portfolio and rarely lose everything.
How do I create an account?
There are several brokers out there which offer such services and which will accept clients from Australia: eToro (minimum deposit $200), Pepperstone (minimum deposit $100) and IG (no minimum deposit). Furthermore, they all offer a demo account which is an excellent way for new users to start trading with less risk before actually understanding how it works.
What can I expect?
Several factors contribute to your success, such as the size of your deposit, the trader you’ve chosen and how well they perform in the market. Generally speaking, though, it takes some time to become used to copy trading, so people tend to say that it takes a few months for customers to see any gains. However, if you want to be successful in this field and invest wisely to avoid losing your funds, we recommend that you spend at least one year on the market before considering changing your job.
We hope this article was insightful and that it will help you understand more about copy trading, its benefits and how to create an account with a forex broker who offers such services.