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What Is Copy Trading?

Copy trading lets less experienced traders copy the trades of more skilled investors, meaning there’s less research to be done about the investments. Here's a look at how it works.

Copy trading lets less experienced traders copy the trades of more skilled investors, meaning there’s less research to be done about the investments.

It’s Beginner Friendly

Copy trading creates opportunity to leverage someone else’s investment knowledge and experience. You don’t have to analyze stock market movements or trends to decide which stocks to buy, sell or hold. You can simply follow a pro investor.

Copy trading makes perfect sense for anyone who wants to invest in the stock market without needing the requisite time or knowledge to invest themselves.

Can Result in High Profits

Copy trading can result in high profits if the trader finds a successful trader to copy. However, the greatest risk a trader will face when copy trading is market risk. If the strategy a trader is copying is unsuccessful, they can lose money.

Traders also face liquidity risk if the instruments they are trading experience illiquid conditions when markets are volatile. Lastly, traders can face systematic risks if the product they are trading experiences sharp declines or rallies.

Easy to Start Trading

Choose a trader by performance, assets, risk and score. Choose a total amount for the copy and the proportions are calculated automatically. You can create an account and start copy trading on most stock platforms like eToro, AvaTrade, Pepperstone and others.

Copy trading is just one way to automate your investment strategy. It takes the guesswork out of choosing where to invest your money. However, it may work better for some investors than others. Knowing the risks and reward potential can help you decide whether copy trading is a strategy you should adopt.

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