HOW YOU CAN GROW YOUR FUND BY COPY TRADING
Copy Trading or Mirror Trading is an innovative investment methodology.
Mirror Trading isn’t as reliant on the information provided by other traders as it is reliant on their actions.
In order for the process to be considered copy trading and not social trading, copy a trader using the automatic system provided by the platform. In order to replicate his performance on his own personal account.
With a Copy Trading service the investor does not give his funds in the hands of the fund manager, Example the other trader (as happens with the common investment methods).
In this case, the investor simply opens a personal trading account, which he keeps the property of, and then, via the Copy Trading platform, he connects his account to the designated trader one’s.
In practice, funds are always in possession of the investor, there is no delivery of money to a third party.
Simply, with Copy Trading the investor delegates the management of his account to another trader (or more then one) from whom he automatically copy the trades.
Why is Copy Trading Beneficial?
Trading in general can be intimidating. It’s not easy to begin with, and once you throw charts and patterns into the mix, it becomes confusing enough to throw even the most enthusiastic newbie trader in panic mode. Copy trading helps you get rid of that fear. It allows you to begin trading without knowing anything about trading. This way you can see what experienced and successful traders do and you can figure out why. If they are more talkative, they can even directly show you and give you a few tips. This is a mutually beneficial relationship.
Also, smart is he who learns from his own mistakes, but wise wise is he who learns from the mistakes of others. Sure, you might not have taken a trade in your life. But that won’t stop you from seeing what works and what doesn’t based on the successes and failures of others. In time you will learn to see everything you need in order to become a trader, yourself. All you need is time.
Being a financial instrument, is obvious that the entire structure is developed on a financial market.
The main market on which Copy Trading was born and grew (due to its immense liquidity) was Forex Market, i.e. the foreign exchange market.
After that, with the advent of CFDs, almost all the other markets and their instruments joined the arena, including stocks, indices, commodities, interest rates, ETFs, and even Bitcoin.
Another fundamental element is the Broker, your ever-present companion. You can’t invest in almost any market without it.
With Copy Trading, you need a broker to get a trading account on which to receive, via the Copy Trading platform, the operating signals of the traders you have decided to copy.
Some brokers, however, are also Copy Trading platform themselves. The concept is the same. In any case, you must choose a broker (among those which support these services) and open a trading account (even demo).
Soon we will show you what the best options for Copy Trading are.
THE TRADER (OR SIGNAL PROVIDER)
The Signal Provider is the trader you have decided to copy.
Obviously, you don’t choose which traders to follow sight unseen. Each platform allows you to observe and evaluate various data on the Trader’s operating performance.
There are various modes.
Some platforms require an evaluation of the strategy before allowing it, while others simply record the performance of the Signal Providers from the moment they subscribe, thus creating statistical data records for the users to consult.
The visibility of these data and their depth and accuracy, as we shall see, are some of the most important elements for a correct selection of the best traders to follow.
THE INVESTOR (OR FOLLOWER)
This is, of course, your role.
Copy Trading is very flexible and can be used for many investment methodologies.
Each investor has his own objective and risk tolerance. Your job is to understand how to translate into practical and specific choices these two components: goals and risk @ management.
The Midasama mission instead is to explain you how to do it best.
THE COPY TRADING PLATFORM
Last component, of course, is the Copy Trading platform, without which this would not be possible obviously.
Before the advent of these platforms, investors who wanted to benefit from the experience of other successful traders were using mailing list or chat rooms services, but, clearly, they were not automatic.
As we shall see, there are different types of Copy Trading platforms, each with its own characteristics, each with its own pros and Cons.
It is up to you to decide which one to choose according to your expectations.
Also in this case, Midasama is ready to help you in this choice.
Investing in a Copy Trading strategy basically means to become a fund manager.
The fund is your, the capital is yours, and the manager is you.
You then have to decide what are the objectives of your fund, what risks you are willing to take, and then look for the best solutions to build it, i.e. the best assets.
In our case, your assets will be precisely the Signal Providers.
Many beginners make the mistake of thinking that the only important thing is finding the right traders, and that everything else doesn’t matter.
On the one hand, it is certainly true, but this is not enough.
Think at the above example, the Signal Provider with $ 100,000 account and you with $ 1,000. If you can’t reason properly, you risk of burning your account even by following the best traders.
The factors on which you need to focus on and to develop as an investor in copy trading are:
- Declaration of (plausible) goals
- Recognition, analysis and management of risks
- Search and selection of Signal Providers
- Choosing each signals replication setting
- Implementation of the Strategy
- Portfolio management and monitoring
Today the lastest platform Midasama has provide all risk and management stated above.
An example by Midasama, if the Signal Provider with $ 100,000 account and you with $ 1,000 account. The platform will calculate your investment amount by Percentage,Example : if with $ 100,000 account are risk 1% per trade,$ 1,000 account will also risk only 1% per trade,that helps you follow trade without worrying.
WHAT ARE THE RISKS
Copy Trading is a form of investment, we said that many times.
And as with any type of investment, you are putting your capital at risk.
Anyone who says the opposite, that there are no risks, is lying and is not in good faith.
Here are some of the risks you will be present with, and that you will be able to face.
NOT KNOWING HOW THE PLATFORM WORKS
For a normal platform,let me tell you an episode actually happened to an investor.
Instead of taking the time to learn at least how the platform worked, an investor started immediately to replicate some Signal Providers.
The problem was that, because of the haste and inexperience, he thought he was replicating their trades with 10 micro lots, while in reality he was doing it with 10 standard lots.
This happened exclusively because he didn’t pay attention to the platform settings.
When he realized it, it was too late.
In Midasama,this will be different from normal copy trade platform.
NOT RECOGNIZING THE RISKS OF THE SIGNAL PROVIDER’S STRATEGY
I’m sure that many times you will encounter Signal Providers with stratospheric performance.
Perfect Equity Line, with no Drawdown, winning percentages close to 100%, steady profits every day.
Let me tell you right away. The strategies behind this type of performance are a mirage, and they hide a sure recipe for failure.
Those are strategies based on techniques such as price averaging down or even worse the Martingale. In the short term they may also give crazy results, but in the long run they are definitely not sustainable, and sooner or later they will face certain failure, and it will happen fast.
In Midasama,we are showing all transparency for all investor by sharing all traders into myfxbook.com. Not just seeing trade though your own MT4 account and also pass result that trader/Signal Provider has been made.
Below are traders Midasama cooperate with:
Trader 1 result : http://www.myfxbook.com/members/midasama/midasama-trader-1/1735552
Trader 2 result :http://www.myfxbook.com/members/midasama/midasama-trader-2/2054435
Trader 3 result : http://www.myfxbook.com/members/midasama/midasama-trader-3/2203120
Trader 4 result : http://www.myfxbook.com/members/midasama/midasama-trader-4/2302248
Trader 5 result :https://www.myfxbook.com/members/midasama/midasama-trader-5/2536223
NOT KNOWING HOW MUCH CAPITAL TO ASSIGN TO EACH SIGNAL PROVIDER
You need to know how to allocate your capital on your different assets, i.e. on the Signal Providers, in order to maintain an optimal risk, minimize losses, and maximize profits.
Otherwise, you risk of giving too much capital to riskier entities, and less to the more virtuous ones.
WHAT ARE THE BEST OPTIONS
Now it’s time to give you the best resources to deepen the topic.
We can say that this post is a brief summary of our guide What is Social Trading (we called so for the reason I said at the beginning, but in essence it’s an extensive guide to copy trading, with few lessons).
There you’ll find all these topics treated more thoroughly, point by point.
Here, instead, there’s the link to find out what are the best Copy Trading platforms.
I hope I was helpful in this mini Copy Trading guide.
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