Copy Trading

Copy Trading in stock market trading allows investors to copy the opening and closing of positions of experienced traders. Most of this takes place in the context of a social trading network on which you can examine and choose other traders. Once selected, it is possible to copy all the trades of trader. The advantage is that one does not fully understand the market needs in order to achieve the same performance as a pro.

Unlike the Mirror trading, a method which allows you to copy specific strategies, the Copy Trading is only part of the money supply, copied in relation to the amount of money the trader, on the account of the investor. That is, the purchases and sales are converted proportionally. Simple example: sell the trader a position in the amount of five percent of the deposit value, this sale also happens in the depot of Copy Traders.

All actions taken by the trader, such as opening and closing, but also the setting of Stop Loss and Take Profit levels are at the same time, proportional to the account balance, running on the account of the investor. The Duplicating Trader reserves the right to terminate the " copy ratio " at any time or to manage the trades copied itself (eg, through their own Stop Loss, Take Profit Level ) Copy Trading led to the emergence of a new type of investment portfolio call what some insiders " people- based" ( people -related ) portfolio. Persons related portfolios differ from the traditional portfolio, since it is a tool to, instead of investing in other investors in the market per se.

The Logic of the Copy Tradings

Various Copy- trading platforms allow different copy- trading logics. These mostly relate to the minimum of the sums to copy trades, the minimum amount of a copy trades and the way in which the money is shown proportionally in the accounts of the copier on behalf of the copied Traders. Some platforms offer the opportunity to occupy a whole " copy " relationship with a stop loss, raising the possibility of adapting the risk of the respective trader.

Copy Trading and Social Trading

Many companies provide trading Copy along with a social trading platform. Social Trading involves interaction between investors who are registered on such a platform. To this end, mostly on the functions of the social media network recourse ( Liken, parts, consequences, commenting). Moreover, providers overviews and statistics of each trader provide, which are publicly available for all users.

Copy Trading Provider

Known Copy- trading providers are Etoro, ayondo, ZuluTrade, Currensee and FX Copy. Since 2010 Copy Trading has become a popular range of brokers to give less experienced traders an opportunity to participate in international trading.

Studies on Social Trading

A 2012 published under the supervision of Yanif Altshuler study from MIT shows that traders at Etoro achieve better performance by 6-10 % than manual trading and 4 % higher than traders which random traders are followed.