For beginners, the Forex Market can be hard to navigate. There is a lot of jargon that you have to wrap your head around in order to be able to make any reasonable profits. The problem is, it takes a lot of time to master all the crucial skills that are required to qualify as a professional. Often times, many novice traders give up without making a dime.
But do you really have to trade to make money on Forex? What if there was a way to invest profitably without actually having to trade? The good news is, there is a way. It is called forex copy trading.
What is Copy Trading ?
As the name suggests, copy trading is a form of forex trading where you copy or replicate the trading patterns of other traders. This is a trend that emerged in the early 2000’s and has over the years proved to be a real savior for inexperienced traders. With copy trading, also known as mirror trading or sometimes social trading, you can make profits as a forex trader even with minimum skills.
The only skills you require is to understand the whole concept of copy trading, that is mostly, how to choose a good trader to follow. You should, however, keep in mind that forex trading, in general, is risky and high returns are not guaranteed. Although copy trading gives you an opportunity to make profits without investing in research and having to understand the ins and outs of Forex, the risk is still there and a lot of caution is required.
In most cases, Forex copy trading can backfire because of a poor choice of traders to follow. That is why it is important that you carefully analyze your potential “masters” using the stats provided by the copy trading platform of your interest to make good money.
Below are a few tips on how to find a good trader to follow.
How to Find A Good Trader to Follow
The following tips will help you land the perfect trading pro:
- Discover the most followed traders
The number of followers often point to the credibility and prowess of that particular trader. If a potential professional is followed or copied by many traders, it usually means that they have consistently recorded outstanding performance.
- Analyze their followers/copiers
Sometimes followers can be fabricated. That is why you should critically analyze the followers to ensure that they are real humans. Another reason for this is to ensure that the follower base is consistently growing. If the number of traders copying your potential professional grows and suddenly drops, it may mean a drop in good performance. However, if the followers are ever increasing, you should add that investor to your list.
- Should have consistent monthly performance
Your search for the perfect trader should not end with the most followed. Sometimes, they might have a lot of traders copying them, but the balance between profits and losses is not promising. That is why it pays to dig deeper and unearth trading gurus who have posted good and consistent monthly performance.
- Number of trades and time on a platform
Traders who have been on the platform for a long are most preferred. They are usually more experienced and know their way around trading. The number of trades conducted is also another indicator. The person you wish to follow should have done a good number of trades with consistent profits.
You might not find the perfect trader to follow, but as you gain more useful skills, you will be able to make more constructive analysis and choose wisely. The type of copy trading platform you choose also matters. A lot of seasoned traders use credible forex brokers and you will hardly see them on new platforms or those with a bad reputation.
Benefits of Forex Copy Trading
Copy trading presents a lot of good opportunities for both those who copy others and those who are copied.
- You gain invaluable trading skills from professionals you follow
- There is a lot of transparency as the trading history of the trader is publicly disclosed to followers
- You can make passive income without actively trading
- You don’t have to understand all the aspects of forex trading
With forex copy trading, you can make good money without having to actively trade. The point is to choose the right trader to follow by carefully analyzing their profiles and utilizing the stats provided by the various platforms.