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What is a copy trading platform and how does it work?

Author: Rosemary Barnes
16.11.2021

The Forex market is an industry with daily volumes of over $7 trillion in trades. It sounds impressive enough. With such giant volumes, the industry makes crowds of traders interested in entering the market.

Meanwhile, the statistics show that some 5-10% of traders capitalize on Forex. Others face losses and leave the path being entirely frustrated. Forex is not the synonym for gambling, and luck doesn't matter that much. Traders' success is mainly based on experience, constant progress, and tons of information explored.

More than 30% of beginner market players understand Forex as too complicated, having no time and willpower to dig into its basics, trading mechanisms, strategies, tools, and so on. They rely on professionals instead of scratching through a hedge made of the FX theory. Such a way is called copy trading. What are the working principles of a platform that offers users to copy somebody else's trades?

While entering such a platform, two options are available for newer entrants. You may open either a master account or an investing one.

Master account: brand-new opportunities for successful traders

Copy trading is a model, beneficial for both investors and successful traders. First and foremost, you get no additional duties. Master accounts are claimed to help subscribers capitalize on your experience and skills. A trader continues to open and close positions based upon his own strategy, and investors copy his (her) deals.

The algorithm for a master trader is straightforward enough:

  • Enter a copy trading platform and sign up there.

  • Open a master account.

  • Place bid and ask orders, upgrade your skills to become the best master trader.

Platforms built the ranking of master accounts to let investors know which traders are the most successful.

Experienced players of the Forex markets are not volunteers - they expect to get rewards. Top-rated platforms enable master traders to impose different commissions (for subscription, successful trades, net profit, and more). Traders decide on their own which fees to activate. Rewards are automated; this is why your interests are protected enough.

Investment account: don't miss your chance to capitalize on Forex

Investment accounts are on the other side of the platform. Newcomer users have some free money, no Forex skills, and a will to get passive income - copy trading sounds a perfect option for them.

How do investment accounts work? You sign up to a platform, open an investment account, and then, the most exciting part commences. Look through the ranking of master traders to understand which market players are the best ones. Analyze their trading statistics, risk levels, and other factors to come up with the final decision. Subscribe to an account you want to follow.

Innovative platforms expand your opportunities. Subscribe to as many master accounts as you want - investment portfolio diversification is among the core principles of a successful investor.

Copy trading is a field with the highest financial freedom. When an investor subscribes to a certain master account, deals are automatically copied by the system; meanwhile, you are free to introduce some changes. Activate risk limits, close deals, use other instruments to protect your capitals from heavy losses.

As for master accounts, investments get extended statistics about every professional trader to get the whole picture.

When a trader's strategy goes contrary to an investor's views, he (she) is able to stop following a chosen trader immediately.

The copy trading strategy is only useful for beginner traders - that is a widespread myth. Experienced traders from time to time dive into such a model serving as investors. They analyze strategies and approaches of successful traders to upgrade their skills and discover something new.

What are the features of a top-rated copy trading platform?

The explosive growth of copy trading popularity forces brokerage companies to connect such platforms. What are the main features to take into account?

  • The Forex market is rapidly moving towards digital currencies; this is why a platform needs to unlock access to crypto assets as well.

  • The more opportunities are available for brokers - the better. Activate diverse settings and limits to manage the copy trading procedure.

  • Top-rated copy trading solutions are compatible with in-demand trading platforms (MetaTrader 4 or 5).

  • A platform should be run on an independent server to not impact the trading platform speed.

  • The reverse copy trading model is in much demand as well. Investors copy trades of unlucky traders, and the system changes deals upside down.

While integrating a copy trading platform with your brokerage business, note that B2Broker suggests an eye-catching White Label solution accompanied by ultra-competitive conditions.

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