At the beginning of our trading career, didn't we all wish for the presence of a professional teacher who could teach us step-by-step the secrets to profitable trading? If there is a way to learn the timing and underlying of other traders' activities, then we can choose, enter and exit the trades with perfect precision.
We share details about copy trading and social trading to speed up your road to profitable trading.
What Is Copy Trading?
Copy trading is when you copy the exact trade of a successful trader right after he or she makes the trade.
The popular trading platform eToro has a unique copy trading feature that automatically duplicates another successful trader's transactions. This eliminates the need to study the markets and issue orders. It's a lazy trader's dream.
What Is Social Trading?
Social trading is when a successful investor makes a transaction, you study the trade's strategy and underlying, before executing a similar move in your account.
SlashTraders' real-time trade alerts are designed with social trading in mind. Even though you need an extra step to issue the same order in your account, you get the opportunity to examine whether the trade fits with your trading philosophy and whether you can handle the same risks. It's a great chance to educate yourself with each trade.
Advantages of Copy Trading
No matter you plan to copy trade or social trade, you need to be aware of the following advantages:
- It's a great way for beginners to learn about trading by shadowing more successful traders.
- By following multiple traders and their techniques, you can diversify your risks.
- You have the flexibility to adjust your buying power before following the trades.
- It's an efficient way to trade without spending too much time monitoring the markets.
- Medium to long-term strategies such as stocks, options, forex and futures are all suitable for copy trading.
Disadvantages of Copy Trading
Copy trading is also known to have a few disadvantages:
- Copying traders give up control in choosing transactions, if they simply execute the trades without understanding the logic and risks involved. They may miss the exit opportunities and be exposed to too many risks.
- The automatic copy trading feature may incur a lot of fees, reducing the profits.
- Manually copying trades is not suitable for time-sensitive strategies like day trading. You can easily lose money if you miss the entry and exit points on extremely short trades.
Tips for Successful Copy Trading
To be profitable in copying trading:
- Use a transparent track record to find veteran investors you can trust. You need to find someone with a long history of believable performance with a trading style that fits with your philosophy.
- Follow multiple successful traders to spread out your risks.
- Use risk management techniques like stop-loss and take-profit orders to reduce your risk exposure.
- Periodically monitor your copy trading performance to make sure you reach the desired profitability.
Now you know how to copy trades to reduce the trading time, you can join the SlashTraders services to start social trading with real-time alerts.
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