If you're new to investment or a niche, copy trading can be a life-saver. Getting good returns by just following and copying a trader's moves is a big win. No stress, rookie mistakes or time waste to stop you from hitting all your investment goals
If you're now trying your hands on a new market, a newbie on the investment scene, or just don't have the time to go through so many strategies, then copy trading may be just what you need. With this strategic move, you can just shove all the hassles and complexities of trading to the corner and be on your way to achieving your financial goals. But what is copy trading and how can you get the return on investment you need with it? Stay with us as we give you the answers and more.
The Basics of Copy Trading Explained
When you hear of copy trading, this should come to mind - an investment strategy where you can replicate the same trades that more experienced and successful traders make. True to its name, it's simply "copy and paste", which means that whatever results they get, you will get too. You should also know that three parties make copy trading possible:
· The provider: this is the trader/investor whose trades you and others will copy.
· The copier: if you're replicating the exact trades of another investor, then you're the copier.
· The broker: this is simply the platform where the provider and copier will connect.
You should also note that there's no limit to what you can copy trade, whether commodities, stocks, crypto, forex, indices, or contracts for difference (CFD).
Understanding How You Can Meet Your Investment Goals With Copy Trading
Since you'll not be entering the investment scene blindly, you'll likely be on course with your investment goals. But let's see how copy trading does this specifically.
More Room for a Diverse Portfolio
The trick to making your investment profitable is to have a little bit of everything in your portfolio - in other words, you should put your money in various asset classes so that you can escape the risks unharmed or enjoy the returns of many successful investments. And what better way to do this than by following the same trail as an experienced trader or investor? With copy trading, you can invest in the same assets as many successful traders, which makes your portfolio diverse and increases your rewards. For instance, you can stay behind investors who understand cryptocurrencies, stocks, real estate, and commodities and put your money on all their decisions and trades. Moreover, you get to benefit from markets that you don't even know anything about.
You're Not Dealing With Your Emotions
Want to know what doesn't go well together? Well, it's emotions and investment. You really don't want to be making decisions on your hard-earned money just because of how you feel. But then, you're human and the feelings could creep in at any time, especially when many asset markets like crypto, and volatility are like the total package. But then, impulsive investment is hit-or-miss, and you can't be too sure what you'll get. So why don't you just avoid the stress by copy-trading? After all, you'll be using the same strategies and skills of someone successful, which means you get to keep your objectivity and rationality.
You Get To Learn More About Investment
Sure, you're copying someone's trades, but who says you can't make the process a learning experience to improve your investment skills? You have all the time to look at how your providers go about their trades and why they are so good at what they do. The good thing is that you can find trading platforms where you can see your providers' performance data (win/loss ratios, historical returns, and preferred markets). If you can make the time to study these well, you'll soon understand why they are topping their niches, and you'll soon be on your way to becoming a top investor or even a provider yourself.
Investment Is More Accessible for You
The nuances and complex aspects of investment can scare newbies, and it's understandable. After all, it wouldn't be prudent to put your money into something you don't understand. But copy trading makes investment more accessible for those making their debut. There's no need to worry about making rookie mistakes because you're copying the same trades as an investment guru.
How To Use Copy Trading to Your Advantage
Now that you understand how copy trading can help your investment goals, knowing how to use it becomes the next step on your investment journey. You can automate the process, where you can follow a provider on a trading platform, choose your risk level, and just wait for the results. Or you can do everything yourself, although this can take your time, and the market would have changed before you got the heads-up to invest. Regardless, you should understand how copy trading works before you start.
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You'll need a good trading platform that supports copy trading. Once that's done, try testing it with a demo account, and proceed to real trading on a real account. Hold on though - you don't want to just follow any trader. Instead, check their track records to be sure they know what they're doing before following them. Deposit your capital, choose your risk level (if possible), and then connect your account to your provider. If you are going fully automated, the platform will copy the trader's moves into your account.
The Conclusion
If you're new to investment or a niche, copy trading can be a life-saver. Getting good returns by just following and copying a trader's moves is a big win. No stress, rookie mistakes or time waste to stop you from hitting all your investment goals. Besides these, copy trading is as easy as getting a good trading platform and following your choice traders. But then, you still need to do your research, especially when choosing a platform or trader, so you don't end up losing your money. Always check for their profiles and success rates so that you can make an informed decision.
