Why you should not copying deals of successful traders

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Why you should not copying deals of successful traders

In recent years, the interest to such a method of trading as copying deals of traders, has significantly raised up. Such a copying is often carried on the brokers web sites or within a specially designed trading networks.

Considering the trade at the financial market, for example – Forex market, the visible becomes the fact that all traders can be divided into two informal categories. First category includes all those who put hard work by themselves, gain experience, visit various seminars/webinars and improve trading system. But the second category, respectively, fit the traders, which are, controls, at first glance. They are managed by the same desire to earn, but with a small correction to the unwillingness of spending their time. In other words, the second group includes all those who wish to gain results with minimum effort. Hence, copying orders of successful traders is the best scenario for game at the financial market, exactly, for second type.

REASONS OF WHY YOU SHOULD NOT COPYING DEALS OF TRADERS

Today almost every broker offers its customers the opportunity to use the coping orders of successful traders. The main goal in here, in fact, is really good. After all, it is aimed to provide the possibility to try their hand in this sphere, especially those who have never been there before, or for those who do not want to waist own time. However, it is necessary to take into account a number of nuances. We offer to think a little whether it is necessary to rely on this thing or not.

Lack of information and knowledge of the trader:

In fact, people often copy trades without know almost anything about how exactly trader deals. In addition, web sites, as a rule, usually provide them with a general information. Often this information is more for making decisions about use this system or not, rather than for obtaining all necessary for training.

Often primitive interface:

the system of copying orders often have really simplified interface. From the first glance everyone would say that it’s great, because it allows everyone easily understand for to use it, at the same, work comfortable. However, there is a small but weighty “but” – this allows you to use only a set of its basic functions.

Statistic, which is based on selection of the information from best traders:

Let’s just say, with the aim to attract new traders, slightly incorrect statistic is often displayed whether on a specific broker web site or a resource offering system of copying. In other words, the traders boards can display information based on the achievements of successful players. So, this in itself muddles the actual picture.

Special risks that affect on every trader:

As everyone understands, together with such copying trader automatically accepts the risks faced in the course of trade by a trader he follows. After all, this overlap means the identity of actions that can lead to mistakes, which in one second can deprive all investments. Therefore, it is hard to adequately assess the risks, but for sure they are higher than the usual. So, think twice before to believe and invest money relying on the numbers in the income graph of the trader.

Copying deals of traders is also characterized by a specific obstacles that make such trading ineffective:

• Here traders often simultaneously manage many accounts and publish only the best results, thereby not revealing the real statistic.

• Possible existence of multiple trading accounts with the increase in tens – hundreds – thousands of percent. But never miss the small details, because often such increase may have happened during the first months of trading, when in current period, the real results are far from ideal.

• The presence of restrictions. Among all trader’s accounts, there are such which, for some reason, are out of reach or had been closed in the short term. The latter, as nothing else can be an evidence of fraudulent activity.

COPY DEALS OF TRADER IS A WORTHY ALTERNATIVE OF TRADING WITH A HIGH RISK LEVEL!

Despite what you have already read in this article, this activity has also advantages as well. Undoubtedly the copying itself is a great alternative for trading at the financial market. However, once again we remind you, think twice, maybe even three times, before using it. Because without sufficient trading practice, you will expose yourself to a possible errors and failures.

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Copy-trading: Pros and Cons of Automated Trading

What is Automated trading?

Novice traders that wish to enter the markets without having a deep understanding of trading, or without putting in a lot of time and effort to develop a profitable trading strategy, often use copy-trading strategies, particularly if they can find a reliable platform like DupliTrade.

After all, it’s not easy to find the right trading strategy, one that is going to provide consistent results in any given market cycle. Testing and refining such a strategy can be a long process and should involve back and forward testing over multiple time-frames to verify that your strategy is robust enough to make profits in a number of different market conditions. If you can find someone that has worked on this process and that is now offering a profitable strategy over time to copy, why wouldn’t you follow this person and copy his trades?

According to DupliTrade – a leading marketplace for trading strategy providers – this innovative way of trading allows you “to automate your trading by duplicating expert traders’ activity according to your selected duplication setup”.

The main advantage to copy-trading is the ability to follow and duplicate successful and profitable traders that have proven track records and battle-tested trading strategies.

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With copy-trading, you do not need to deal with trading stress, or to be sitting at your trading desk following the markets for hours – your trading account is copying the trading positions of a profitable master account that you would have previously selected.

Copy-trading is especially useful for newbies in the markets, but it is also used by many experienced traders that understand copy-trading and want to take advantage of following and copying leading traders, or fund managers.

One of the most important steps in copy-trading is to select the strategy your trading account is going to follow. DupliTrade’s strategy providers give a lot of information about the general activity of the account, with full statistical data and additional information you might require to select the proper audited strategies displayed, and most of the strategy providers follow a semi-automated or automated trading method.

How Can You Trade with Automated Trading?

Automated trading is all about using a trading system that limits (or even eliminates) human intervention in the process of buying and selling financial assets.

The first thing you need to do is determine the range of factors your strategy will follow:

  • Market direction
  • Position size
  • Risk management rules
  • Money management rules
  • Technical indicators

One of the biggest risks when putting together a systematic trading strategy is choosing parameters that aren’t viable in the long run. Here are a few things to think about:

Pros of Automated Trading

1# It removes the emotions from the trading decision process

By using a systematic trading method, you’re able to reduce human intervention, and you can consequently avoid being influenced by your own emotions, which can negatively impact trading performance.

2# It allows you to trade around the clock

As you’re using computer models and programs to implement your automated trading strategy based on a pre-determined criterion, your system never sleeps. You can, therefore, make money on markets that are not in your time-zone, or when you’re doing things other than trading.

3# It allows you not to spend hours in front of the markets every day

Even though creating a profitable trading method takes time and energy, an automated trading strategy reduces the amount of daily work you need to dedicate to trading, which means that you can make money while having a 9-5 job, or doing other things you enjoy doing.

4# It allows you to accelerate order execution

Computer programs used for trading are a great way to accelerate order entry speed, especially in fast-changing trading environments, which are often hard to follow.

Once your automated strategy opens an order, all the other associated orders are also in the system, such as stop-loss and take-profit orders, which can make a difference when markets move very quickly.

Cons of Automated Trading

1# There is no possibility to make discretionary choices or to adapt the set-ups without your input

Obviously, automated trading is the opposite of discretionary trading, meaning that there is no ability to make discretionary choices. What this means is that you will not be able to decide when to enter (or exit) the market based on your analysis of the current market conditions and the news available.

So, if market conditions evolve outside of your initial analyses, your trading strategy may not be equipped to deal with it. For example, some trading methods are very successful in rangy markets, but they poorly perform in trendy markets.

2# You’re 100% dependant on technology and the system you’ve created

Even though one of the biggest advantages of systematic trading is that it removes human emotion in the trading decision process, thus making your decisions more rational, it also means that you are entirely relying on technology, which has its own host of problems (Internet connection cut, network crash, computer/server problems, etc.).

Bottom-line

Automated trading can help you free up time to dedicate to the things you like while making money on the markets, especially if you’re following expert investors through copy-trading platforms.

Copy trading will allow you to copy the actions of successful professional traders in real-time on your trading account. You won’t need to do anything; everything is automatically done for you.

In the end, the question you need to ask yourself is “how much time can you (or do you want to) spend on your trading on a daily basis?”.

The advantages of copy trading

Today’s investors are savvy. They are looking for new ways to build upon their investment strategies. At the end of the day, they want the best performance for the funds that they are spending their hard earned dollars on.

Copy trading is a common trend that many investors have recently adopted. It’s a way of allowing traders on the active markets to be able to mimic the actions done by another trader. People can copy the positions that are open and managed by someone else. This is usually done in a social trading network. The person who is copying these activities usually has the option to disconnect copied trades and manage them individually.

Forex is one of the more popular platforms used for copy trading. You can learn more about the best forex copy/mirror trading signals provider and other options online. You can research success stories and get insight as to how people successfully perform these transactions.

Here are a few advantages of copy trading:

1. It’s helpful for new traders

People who are new to the trading market are often looking for an effective strategy that works. Copy trading allows them to see how others succeed . They can latch on to those tactics and start making real money quickly. You don’t need to do a lot of research or even know a lot about the market to start trading right away. All of the trades from the professional you are following are traded. If they do well, you do well. The most successful traders you copy, the better chances you have of being successful.

2. It limits potential losses

Most traders are not prepared to handle losses very well. Some of them may be spending their life savings or important discretionary income on the market . Substantial losses could be detrimental to their way of life. Copy trading can help these traders limit potential losses by paying close attention to what established traders have been doing. Monitoring these activities closely can make a difference between a great day and a poor day in the market.

3. It’s a passive investment strategy

Copy trading is a strategy that doesn’t require a lot of forethought or effort. You can invest on whatever you’d like. You can start right away, or you can take some time watching other investors before deciding to imitate what they do. If a certain investor isn’t having success, you can always move on to another investor to follow. Best of all, it’s something to do on your own time. You can trade when it’s convenient for you. Many platforms also help you manage your portfolios with expert advice and suggestions. They take a lot of the guesswork out for you.

4. You can manage risk more effectively

If you’ve been trading manually, you’ve probably encountered issues related to risk management. Copy trading lets investors copy as few or as many existing investors as they want. Watching what they do and following productive strategies is a great way to minimize risk while still staying ahead of market trends. Just pay attention, and you’ll soon be making good money in no time.

These are just a few benefits of copy trading. It’s not for everyone, and for every reputable trader, there are plenty of reckless traders to steer clear of. It may take a while to turn a profit, but it can be done with enough practice and effort. Copy trading is a simple, effective way to earn extra income that can be put aside for a rainy day, saved for larger purchases or just to enjoy some of the finer things in life.

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