Certainly, you can make consistent earnings from copy trading, but it's important to keep in mind that your results may vary based on your choice of traders to copy, and your risk management approach.It's always recommended to thoroughly research about the traders you are going to follow and do practise on demo account of any copy trading platform (eg. zulutrade or etoro) before going live.
Is Copy Trading the right fit for those who are not able to make their own successful strategy?
- Thread starter Cyril02
- Start date
I highly doubt that. Even though you may be able to reach out the traders that you have intentions to copy trades from and ask for a track record, and even if they claim to be an actual genuine professional trader or something like that; how are you going to know that their track record is legit?
I think the best favor you could do to yourself in the game is learning everything and educating yourself to be an independent trader with a self-starter mentality and self sustainability. Even in the best case scenario, it would be wise to depend on your own work ethic.
This does not mean that you should not copy trade at all. If you can identfiy a certain successful traders, you can copy them a little bit and try to understand their logic, strategy and reasoning enough to emulate them. Then you can try to do it on your own. It can also be good for practicing, just like the demo account.
I think the best favor you could do to yourself in the game is learning everything and educating yourself to be an independent trader with a self-starter mentality and self sustainability. Even in the best case scenario, it would be wise to depend on your own work ethic.
This does not mean that you should not copy trade at all. If you can identfiy a certain successful traders, you can copy them a little bit and try to understand their logic, strategy and reasoning enough to emulate them. Then you can try to do it on your own. It can also be good for practicing, just like the demo account.
What types of traders should I avoid copying in order to minimize risk?
The ones that have a losing record over time.
Avoid copying inexperienced, high-risk, and inconsistent traders. And make sure to do your own research and carefully evaluate the performance of traders before following them.
I have been copying trades for some time now, and I have realised that my current risk levels are exceeding my comfort zone. So, I was thinking about a way to adjust the risk levels on the trades I am copying to better align with my investment strategy. Can anyone help me with this?
Yes, many platforms allow it. For instance, I can easily adjust the risk levels of the trades I copy on zulutrade. I usually set TP and SL for the trades that I copy so that I don't have to worry about the market going haywire. It's a pretty simple way to make sure I don't lose sleep over my trades!
I agree with @Laoise#886. Once you have determined your risk parameters, you can also adjust the trade size of the trades you are copying to better align with your investment goals. This can involve reducing the size of trades that have a higher risk profile or increasing the size of trades that have a lower risk profile.
In addition to considering risk management parameters, diversifying your copy trading portfolio by following traders with different trading styles and risk levels may also be a good idea.
Copy Trading is better for learning about trading strategy and trying to understand why their strategy works. I wouldnt suggest you to completely rely on them. Also it's ideal to check carefully if their trading strategy works in long-term or you might run into a big lost.