Is Copy Trading Suited for New and Inexperienced Traders?

You are trying to invest in financial markets but you don’t know where to start. You have plenty of online options available but you don’t know how to pick the right one. Well, just about any new investor in the world has gone through the same process. However, you should consider yourself lucky because, in the modern era, you have the option of copy trading available to you. 

In this method of trading, you can copy the trades of other experienced traders who know what they are doing. As an investor, you don’t have to do anything other than pick a trader and then copy their trades. The meaning of copying is that you emulate their trades, take the same trading steps these traders take, and make the same gains or losses these traders make. 

Is this form of trading the right way for newcomers to start? For the most part, the answer would be yes. Let’s look at some factors to favour that answer. 

Doesn’t Cost Much to Start

The first thing you should know about copy trading is that it does not cost you a lot of money. As a new trader, you definitely don’t want to put all your life’s savings on the line. At the same time, you probably want to test the waters before you get started with trading. What happens is that you don’t usually spend a lot of money on the copy trading platform. It kind of acts like the middle person wherein you don’t pay anything to the platform for trading. You are still signed up with a broker and have to pay them according to their commission plan or spreads. 

As for the copy trading platform, it might charge you a monthly fee for using its services. Other than that, you just have to cover the spreads applicable to your trades from the broker you have signed up with. What you really have to look at is the value you get from such a setup. You pay a monthly fee but the chances of you trading may go higher. 

Makes Broker Signup Easy

One of the challenges you will face when you start investing online is signing up with the broker. In a way, you could say that you have to pick two different platforms and have to research them separately. Firstly, you have to research the broker and make sure that you go with a licensed, regulated, and legitimate one. Secondly, you have to complete the same process for the copy trading platform. However, you can make things easy by signing up with a platform that offers you the brokers too. Yes, you can find platforms that have a list of brokers you can choose from and signup. 

The best part about signing up with a broker like this is that you don’t have to go through research twice. If you have thoroughly verified the copy trading platform, you can trust their list of brokers as well. These brokers are selected by the platform after they have met certain criteria. What it means is that you can pick any broker without worrying about illegitimacy. They are usually regulated brokers with great reputation in the online trading industry. 

Plenty of Educational Material Available

If you are starting out, chances are that you don’t have a lot of knowledge about trading. However, you don’t have to get this knowledge from multiple sources on the internet. Usually, you will be provided with all the knowledge you need on the copy trading platform. Firstly, you have a lot of educational material on the website to help you with the basics of trading. However, the more valuable tutorials are available to you only when you sign up with the platform. You can rely on videos and eBooks to learn about trading. What makes this type of learning great is that you can learn at a pace you are comfortable with. 

Now, an important question that might have in your mind is whether you need training at all. If you won’t be trading on your own, should you really learn forex trading basics? Well, yes, you will have to learn at least the basics of trading. How else will you know which trader to pick to copy? You have to learn the various concepts in trading to know that the trader you are about to pick will be good for your career. 

No Traders Management Needed

You know by now that you will have to consider various trader features to pick the right one. How long have they been trading for? What’s their success rate with trades? Which asset class do they trade in the most? What type of trader are they i.e. scalper, position trader, swing trader, or day trader? With so many things to consider, you might be overwhelmed a bit if you are just starting out. However, there are platforms that can help you with this part of the process. They can manage the traders on your behalf and provide you with a list of traders that are most suited for you based on your trading preferences. 

You don’t even have to worry about your trading portfolio because the rebalancing is done by the platform on your behalf. Last but not least, you usually don’t even have to pay the traders unless their trades make you profits. In other words, you copy a trader on a profit sharing basis. 

Final Thoughts

What do you think about starting out with a copy trader based on the features above? Do you think they are suitable for you if you haven’t traded before? The fact that you don’t have to go through the process of vetting a broker or pay a huge cost to get started makes it a great step for new traders to go with a copy trading platform. Just make sure that you narrow down to a few and compare them based on their features before you finalize your decision and agree to sign up.

To learn more visit Zulutrade.com

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