Copy trading doesn’t depend much on the information provided by a trader but on his actions. In short, copy trading means you can copy the actions of other traders. All the steps will be done automatically.
A part of your portfolio is connected with the portfolio of a trader you choose. As soon as you copy him, all of his open trades will be copied to your account. Any of his further actions will be also mirrored in your account
You have to decide quickly what amount of money to invest in a trader. Usually, it can’t comprise more than 20% of your portfolio. The amount used for the trade consists of the percentage of the portfolio of a trader along with how much you decided to invest.
Let’s imagine your current balance is $1000. There is no wish to open trades but you think of copying a trader. Despite his statistics is really promising, you still have some doubts and wouldn’t like to invest much. For that reason, you invest $100, what makes 10% of your funds. One open trade of that trader will be copied to your account.
Your investment in the amount of $100 is a percentage of the portfolio of the trader. Imagine his portfolio is $1000, so your investment makes 10% of his portfolio.
In case that trader makes a trade for $100, your trade is the same but the money invested from your account is 10% of the investment of the trader. So, if the trader invested $100, your investment will be $10.
These calculations are automatic and you do not have to worry about them, everything is done by the system.
Copy Trading: How to Add and Remove Funds
If you like the way your trader handles your investments, you can raise your funds. Once a trade is copied to your account, you invest more, and thus, your profit is increased in case of a successful trade. It increases the risks too though. In case your trader loses a trade, you will bear bigger losses as well.
The good idea is not to invest in a single trader, but to invest in different traders. According to the performance of the traders, you can still reduce or increase your investments. In case you are totally satisfied with the trader’s results, try to increase profits and invest more. Keep in mind always that it’s always a risky move to invest more.
Some of the platforms entitle you with more control than others. On some of the platforms, there is a fixed system.
Some of the platforms use a fixed system. It means that when you start following your trader, you can stop copying him as soon as he loses a certain amount. There are platforms allowing you to control funds manually. In case there is a trade you consider to be risky or don’t like it, you can simply close it manually.
Whatever way of copy trading you choose, it’s always better to learn from the mistakes of other people. It’s a good way of earning money for newbies, but it also has its risks.