How is the Investor Selected to Copy?
Now we get to the most important part, a strategy to follow is choosing a provider. Unlike following someone on social media, there are financial risks in copy trading. This means you won't be copying signals from any trader on the block, as you can see here.
One of the things you should evaluate is an investor's performance in about a year. Past performances may not guarantee similar results in the future. So you will have insights into the long-term performance of a portfolio.
For example, instead of gains in the six-month period and losses in the next six-month period; Be on the lookout for consistent returns where you are guaranteed 3% earnings every month for the next 12 months.
You should also check if a strategy provider is trading and risking real money. This is how you will measure their confidence in their strategy and ability to minimise risks.
Let's get one thing clear: It's not easy to determine whether all the traders you choose will consistently bring you profits. Even the best traders have their moments of loss, and you can come at a bad time. But focus on choosing an experienced and talented investor.
How Is A Good Trade Recognised?
While copy trading is automatic; It's still helpful to know if the strategy provider you're following is trading well. You will know if it is made according to a solid trading approach, it can be copied and it is largely profitable.
What exactly does this mean?
First, you want a trade based on a trading plan or strategy that has proven to work. The best traders have developed a plan over time and follow it despite the losing streak. Because they know it works.
The more time you spend watching a pro on the go, the easier it is to see a layout. If it's fine, the processes you copied will be fine too.
Next, you want a repeatable trade based on safe setups. For example, a trade is made because of the market's uptrend and a two-foot pullback to the moving average (MA). If the same price action happens in the future, you can take another trade.
Of course, you want a trade that gives you a profit as a whole. Not all good trades are likely to be profitable. So if it's a large part of your trades, you're on the right track.
Keep track of all your trades and review them to determine their profitability. Be sure to evaluate why you made this trade and whether you can replicate it, rather than based on results.
Build Your Trade Confidence
Copy trading allows you to closely monitor other traders and gain confidence in doing so. This way, you can switch from a demo account to trading with real money.
After gaining more knowledge and skills, you can move on to manual trading. We will provide you with educational resources, including weekly trading tips that you can use to maximise your forex trading journey.