Top 4 Things You Need to Know
on How to Pick A Top Trader
Copy trading is a form of trading with growing popularity.
This new form of trading incorporates the exiting world of forex currency trading with social media.
Learn how to limit your risks and increase your rewards by picking the right trader to copy.
Types Of Copy Trading
Copy trading, also known as social trading, is a form of online social media mixed with the exciting world of currency speculation. It allows members to interact through a variety of online venues, post trades, follow each other and even supports automated trade execution.
Even though copy trading can make forex a lot less risky it can also make it a lot more risky. Not all social trading platforms are the same and not all traders are the same. Some are even scams.
I know it is shocking to hear this but it's true. There are scams on the internet.
What Type Of Copy Trading Is For Me
To answer this question you need to know what types of copy trading there are. The first and most basic is the forum. There are forums all over the internet for forex traders where they can discuss trades and strategies.
The next type is the SSP, or signal service provider. These business sell signals to traders and deliver them through a variety of electronic means.
The next type is the broker support social trading feature. Some, but not all, forex brokers are now offering forums, blogs and other forms of social copy trading for their clients. The best services though come from the pure social copy trading platforms like Etoros, Zulutrade, FXCM and others.
These are full service social media trading platforms that support automated trade execution based on traders you are following.
What To Look For In A Trader
It doesn't matter which type of copy trading you choose because you will still want to look into the same things. Of course you want to pick a trader with a great win/loss rate but after that the first thing you want to check is the background of the trader or business you are following.
How long have they been trading? Where did they learn to trade? How many people are following them and what is their success rate?
After you check into all of this you will need to check into the data. Just because a trader says they are good does not mean they are. Likewise, it is possible to skew data so that win/loss rates appear better than it actually is.
Be sure to look and see how long losing trades are allowed to sit open, this in one way to avoid posting losses. After you have satisfied yourself with background information and a thorough check of trade log data you need to move onto the reviews. Look for reviews of your trader and platform.
Dig deep and look for honest third party reviews, not ones obviously written to boost support.
Managing Your Copy Traders
Once you have found a trader you think you can trust go ahead and follow them. I do suggest that you do not give them access to your entire account.
Choose 3-4 traders and follow them all. Give each a set percentage of your account and manage them as you would any portfolio.
By diversifying into more than one trader you protect yourself from bad traders and bad trades because even the best traders have a losing streak once in a while.
Keep track of your traders, monitor how they are doing and if one starts to underperform, cut them out and find a new one.
Check out my ebook on "Copy Trading Essentials" to get all the information you need to keep you and your capital safe in the market.
Trading foreign exchange carries a high level of risk, and may not be suitable for all investors. The high degree of leverage available can magnify profits and as well as loses. You can lose more than your initial deposit. Before trading, please carefully consider the risks and inherent costs and seek independent advice as required.