Copy trading is a trading strategy which involves copying, or mirroring, the positions opened and managed by another investor. This is usually done through some sort of automated service, allowing traders to automatically copy the actions of another trader, and profit from the strategies that the copied trader employs. This is different from mirror trading, in that the copied investor is usually given a proportion of the copied funds.
The copying trader retains the ability to disconnect the copied trades, and manage them themselves. The compensation for the copied trader typically takes the form of a flat monthly fee, paid by the trader copying their trades. This allows less experienced traders to benefit from trading decisions of investors with experience.
This all sounds well and good, but is copy trading profitable? While some copy trading techniques and strategies can lead to some profits for certain traders, copy trading can also lead to huge losses. In many places, copy traders effectively work like investment managers, but without the same regulations governing their actions.
Another drawback to copy trading is that since these traders are automatically copying the positions of other investors, it is difficult to learn any practical Trading knowledge from copy trading.
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Is Copy Trading And Mock Day Trading The Same
Copy trading has a lot of similarities to mock day trading. These similarities are also shared by other similar activities such as mirror trading. While all three of these strategies involve observing the positions of other investors, and applying the practical knowledge to your own trades, there are a number of differences that set each of them apart, as well.
Mirror trading, for example, involves automatically executing trades according to a strategy that the trader is “mirroring”. This is contrasted with copy trading, in that copy traders actually copy exact positions of another investor automatically, for a fee. Mock trading involves the usage of a demo account to practice trading in a practical setting. This is typically done through paid, or free day trading simulators.
The advantage of watching practical trading and applying the strategies you learn, versus automatically copying the trades performed by a third party, allows you to actually apply the practical knowledge you gain from watching trades. Automatically copying trades, on the other hand, does little to teach you about the practical strategy behind the trades you are copying. Since learning your own trading strategies is a huge part of becoming a successful day trader, it is important to make sure you are adopting approaches that allow you to learn.
How To Start Copy Trading
Getting started in copy trading can be as simple as finding an investor whom you wish to copy. While it can be tempting to set up an automated copy account with an investor who effectively manages your strategy for you, being able to watch a live trader and apply their strategies in your own trades is a much more practical way of learning day trading strategies.
Tradenet gives users a unique opportunity to see expert trader Meir Barak trade every day in the live trading room. This allows hopeful traders to see different trading strategies in action, as well as how different practical aspects of trade knowledge can be applied in a real trade setting. Users also have access to a live trading chat room, where they can discuss what they’re watching with other traders of all skill levels.
If you watch Meir and the other Tradenet traders work, you can learn practical aspects of their trading strategies, which you can then copy and apply to your own trades in order to add to your day trading knowledge.
Tradenet Also Offers The Following
Although copy trading can be an effective strategy, Tradenet suggests that you do not try and learn through copy trading. This can lead to large losses, and even cause difficulty in really learning the practical aspects of trading strategies. Instead, Tradenet offers a host of other resources designed to get hopeful traders started in the world of day trading:
- Access to a trading channel with many videos, tips, and past day trading sessions
- Free courses to teach you strategies and tips for day trading
- Education packages with dozens of topics and interactive learning components