Copy Trading allows traders to directly copy the positions taken by another trader. Many people earn a lot of money from trading: experts use their expertise to bet on rising and often falling prices. The only decisive factor is whether the assessment is made correctly – whether the prices ultimately fall or rise is completely irrelevant. However, the prerequisite for high earnings was that specialist knowledge that only a few people possess. Thanks to Copy Trading South Africa, laypeople can now also benefit.
Best Forex Copy Trading Platforms and Brokers
What is Copy Trading?
Anyone who has already tried online trading will have to recognize that trading is by no means easy. Numbers have to be constantly interpreted and decisions made – which is not always easy. So far, those who do not have the necessary specialist knowledge have actually only had two options: either they acquire the knowledge and experience, or they act according to gut feelings. With luck the latter may work, but in most cases high losses will result. No responsible investor will invest a significant amount if the prospect of earnings is not good.
Copy trading, often referred to as social trading – is a third way: the investor simply copies the investment strategy of a professional traders. The advantage is obvious because some investors have been proving for years that their tips are literally worth their weight in gold. Of course, it would also be possible to develop your own investment strategies by informing yourself about this topic in appropriate specialist journals. But that in turn costs a lot of time that private investors actually don’t want to invest.
What speaks against simply omitting this detour and copying the investment strategies without further action? Even if there were still skeptical voices on the topic a while ago, social trading has long been established. In recent years, social traders have demonstrably been able to achieve an average 10 percent higher return than is the case with conventional investments. In times of chronic low interest rates, this is a lot of money, which is generated here with comparatively little risk and without any noteworthy effort.
The so-called “swarm intelligence” is often used on the Internet: if someone has bad experiences with a mobile phone provider, this impression is posted in a forum. A good product is rated positively in the online shop, with the result that the ranking increases – and even more people buy this product. The search algorithm of search engines also takes into account, among other things, how often a website was accessed. The more often this is the case, the better the website will be quite obvious – which further favors the ranking. It is only in the logic of these experiences that joint investment strategies work with successful traders.
How Should Copy Trading Work?
Anyone who is interested in investing with Copy Trading should not, however, become uncritical. Not every trader is as successful as it first appears. Even if the investment strategies should not be dealt with in detail, it is worth pursuing this trader for some time. The observation makes it possible to evaluate the investment strategies – and ultimately also the success that they promise. To judge whether a system is successful or not, of course, significantly less specialist knowledge is required than if the strategy itself is developed. Nobody is dependent on Copy Trading either: the professional traders are also known as signalers, which describes the role well. Nobody is forced to adopt the strategy completely. Intervention is of course also possible if the course development does not meet expectations.
What Should Be Considered When Copying?
In principle, the trader should heed some basic tips:
- Copy trading in South Africa reduces the risk of loss and noticeably increases the likelihood of significant profits. Nevertheless, not every system is safe. Nobody should invest all of their old-age provision.
- Only those amounts for which a loss can be tolerated.
- Even if profits are luring: caution pays off, as does a certain amount of patience. It is never advisable to constantly change a chosen strategy. Most professional traders follow principles that do not always promise rich profits immediately.
- To reduce the risk of loss, it may be wise to mix investment strategies. This broad spread, which is recommended by financial experts, lowers the risk. The so-called diversification effect occurs, which reduces the chances of large profits as well as correspondingly high losses.
- Even if a more extensive investment is planned, entry should be slow. Of course, mistakes can also be made when selecting the top traders.
- There are now many different portals for trading. The conditions should be as favorable as possible, after all, high fees also reduce profits. So you should make extensive comparisons before registering. The number of possible trading strategies also varies.
- There are a number of metrics in social trading that indicate the success of the signal generator.
In the past, eToro in particular has made a name for itself in Social Trading: the Cyprus-based portal specializes in Social Trading. Small investors have it particularly easy: an account can be opened with a sum of 100 USD. This way, testing of Copy Trading is possible without great risks. By registering with the banking regulator, public control mechanisms are also guaranteed. Another advantage: eToro’s clear web interface can be used in twelve languages. Because no software has to be used on the computer, but a web interface is completely sufficient, it is also possible to use mobile devices or external computers.
Conclusion: Winners On Both Sides
This shows in the end: Despite all initial criticism, Copy Trading has already proven that consistent profits are achieved. Less savvy traders benefit from the investment strategies of the professionals; Signalers increase the profit through the right selection. In addition to a certain caution when getting started, newcomers should above all turn to the right portal: Industry favorite eToro has proven particularly useful when private donors want to invest a manageable amount.