Copy Trading | [year] Ultimate Guide

Copy trading is a strategy for traders to copy other individual traders who have a proven track record in trading.

Copy trading is an excellent way to diversify your portfolio and make successful trades with increased ROI, especially if you are only a beginner in trading.

It is like mirror trading, but the two strategies shouldn’t be mistaken for the same concept.

This strategy enables traders that are copying to duplicate all actions related to the position they are copying – Stop Loss function, open and close positions, and other actions are all copied from the copied trader’s account.

Traders can also dissociate their copied trades and manage them themselves while only copying positions, much like mirror trading. 

Our three picks that you should try:

RobinHood – Get a free stock worth up to $200 

Coinbase – Earn up to $167 worth of Crypto while learning about Crypto

BlockFi – Get up to a $250 bonus in Bitcoin with a deposit


What are the Benefits of Copy Trading?

Copy trading is a unique opportunity to copy and duplicate positions of traders who have more experience and knowledge in comparison to you as a beginner trader.

That means that copy trading allows leveraging other traders’ knowledge and experience without the need to analyze the market.

That way, traders who are copying are saving time and reducing risks involved by copying positions and trading actions from more experienced traders.

You don’t need to analyze the market to decide which stock or financial asset to buy, sell, or hold.

Copy trading enables traders who are copying to be passively involved in trading as all significant actions are determined by someone else.

That is why it’s important to choose a trader who has a proven track record of consistent gains.

Copy trading is particularly popular among traders who are only beginning to grasp the mechanism of financial markets, as well as among traders who prefer to be passively involved in trading.

Copy trading allows new and inexperienced traders to get involved in trading simply and effectively while reducing the risks involved, which is in part the reason why copy trading is so popular.

Traders don’t have to do their research and analysis to come up with an effective and efficient trading strategy as they are duplicating positions from more successful and experienced traders.

Not only that you can save time spent on actively trading, but you can also learn how to choose your positions by learning from more successful traders.

Is Copy Trading Reliable to Make a Living?

Copy trading helps beginner traders to get involved in trading with minimal knowledge to maximize their returns on investment (ROI) and mitigate the risk involved.

This makes copy trading perfect for beginner traders as they can earn while being passively involved in trading – more importantly, traders who are copying can learn from more experienced traders and later manage their own trades and positions.

In case you find experienced traders that you can copy from, copy trading can become a reliable way to make a living. In general, copy trading makes a great source of passive income.

Is Copy Trading a Good Idea for Beginner Traders?

Yes, definitely. Copy trading is an excellent way for beginner traders to minimize the risks involved in every trading strategy while generating profits on their initial investments.

Beginners can earn with minimal knowledge and nearly no experience, which makes copy trading perfect for traders who are being introduced to the intricacies of financial markets.

The reason why copy trading is perfect for beginners is the fact that traders who are copying can be passively involved by copying every action made by the copied trader. The key to success here is finding successful traders you can copy.  

Copy trading is legal in the United States as long as the broker or the trading platform you are using is properly regulated by the CFTC or the SEC.

Copy trading is also legal in Australia, Europe, and the United Kingdom as long as the brokerage platform used for copy trading is regulated by adequate financial entities.

Is Copy Trading Really Profitable?

Copy trading is one of the most profitable ways to generate returns from trading, especially if you are a beginner trader.

Traders who are copying are mimicking the moves and actions of more experienced traders, which involves closing and opening positions, Stop Loss function and Take Profit.

This case increases your chances of making a profit even though you may lack knowledge or experience. Even if you are an experienced trader, you can find benefits in copying trades from other successful traders with a proven track record.

You will need to make sure that you choose the right people to copy. You will need to look at their history and past performance to make sure that their strategies have worked year on year and they have more than just one year of trading history.

Do I Need Prior Trading Experience to Engage in Copy Trading?

You don’t need to have prior experience in trading to get involved in copy trading, however, you should know copy trading basics and how copy trading works.

You should know that copy trading involves choosing a trader you will follow whose trades you will copy. Moreover, all traders will be copied involving all actions related to the copied trader’s trades until you decide to manage your own positions.

Another thing to note is that all trades are duplicated proportionally, so even if you have greater funds than the trader you are copying, the percentage of invested funds will be proportional to the copied trader’s portfolio value.

Pros and Cons of Copy trading

New and beginner traders can mitigate the risks involvedProfessional and experienced traders also suffer from losses and can make mistakes
Increased chances of generating profitsYou always have to be online for automated mechanisms
Helps traders who don’t have a thorough understanding of forex and stock tradingFees are involved for copying other traders, depending on the platform
Saves time as an excellent way of being passively involved in trading 
You can control the losses and reduce the risk by switching to different traders 

Best Copy Trading Platform

When it comes to finding the best copy trading platform, eToro is the most popular and frequently used brokerage platform.

eToro is also a platform of choice for many experienced and professional traders, so there is a great number of traders with a proven trading history and diverse portfolios that you can copy from. eToro also hosts a Risk Score for traders who are involved in the eToro Copy Trading program.

You can check Risk Scores for different traders, ranked from 1 to 10, where traders with scores from 1 to 4 are low risk and from 5 to 10 are traders with high-risk trades.

Moreover, copied traders don’t charge any fees for copy trading, in addition to not having management fees for the CopyTrader feature. 

etoro copy trading

eToro Copy Trading

eToro copy trading is known as eToro CopyTrader and it is one of the platform’s most appraised products and functions.

Any trader can use eToro CopyTrader to view what other traders are investing in real-time and copy their trades and actions.

CopyTrader is perfect for beginner traders and traders who lack experience but is also the perfect feature and investment tool for traders who don’t have time to actively follow up with live market changes.

Copy-trading on eToro doesn’t involve fees for copied traders as traders are being directly paid through eToro Popular Investor Program.

That means that you pay no management fees and that you can copy any trader’s portfolio at no additional costs.

Copy trading on eToro also involves access to a community of traders where you can discuss trades, exchange opinions, and benefit from the collective knowledge of experienced traders.

What Can You Copy Trade on eToro?

eToro CopyTrader allows traders to automatically copy trades of the top-performing traders on the platform.

Regardless of what type of financial assets you are interested in, CopyTrader allows you to copy trade cryptocurrency assets, forex trading, stocks, commodities, indices, and ETFs.

What is the Minimum Amount I Need to Start Copy Trading on eToro?

The minimum amount required for a trader to start copying other traders on eToro is $200. You can start trading with a minimum of $200, while each copied position should have a minimum of $1. Positions with less than $1 won’t be copied.

How Does Copy Trading Work On eToro?

CopyTrade tool on eToro is generally a rather simple feature that is easy to use. The feature allows you to copy all traders from a maximum of 100 traders in the program at once.

You can also copy new trades and follow up with Stop Loss in real-time. By choosing to copy a trader on eToro, you will be copying everything they do in real-time.

The platform also has a Pause Copy command, which means that if chosen, you will automatically stop copying traders with all the copied positions being closed by automation.

How Can I Find Good Traders to Copy in eToro?

eToro makes it easy for users to find traders to copy by hosting a list of top-performing traders, so you can choose to automatically copy traders with the highest profitability rates and lowest Risk Scores.

Risk Scores grades traders from the program from 1 to 10, allowing users to choose the traders they want to copy based on the level of risk involved. Traders with scores that are lower than 4 are traders with low risk.

Who are the Best Day Traders to Copy in eToro?

eToro is home to thousands of successful traders, while many professional traders are involved in the program and are paid by eToro for having their portfolios and positions copied by other traders.

eToro regularly updates the list of top-performing traders on the platform, so you can choose among the top traders on the entire brokerage platform.

Best day traders are decided and ranked based on their risk scores, statistics, portfolio value, assets, and returns on investments.

How can I start Copy Trading?

You can start copy trading on eToro by opening an account and investing a minimum of $200 in a chosen portfolio that you want to copy.

To start copy trading, choose a trader or multiple traders that you want to copy, input the amount you wish to invest, and click on the Copy button.

Once you click on Copy, all positions from a chosen trader will be automatically copied in real-time and in the amount proportional to the funds allocated by the trader you are copying.

Is eToro Copy Trading Profitable?

eToro is home to some of the top traders while a great number of professional traders have joined eToro’s Popular Investor Program.

Copy trading on eToro is profitable if you choose traders with proven trading history. It is recommended to choose traders with low Risk Scores, however, you should note that every trade involves a certain level of risk.

Is it Safe to Copy Traders in eToro?

Safety is never guaranteed when talking about risks involved in any type of trading or investing.

However, eToro ensures that CopyTrader users can follow up with key metrics and data related to the copied traders who are enlisted in the Popular Investor Program by transparently disclosing Risk Scores and relevant statistics.

You should note that even the most experienced and successful traders can suffer losses so you need to be always careful and do your due diligence before investing in the market.

How Does Copy Trading Work on eToro?

Copy trading works by allowing traders to copy other, more experienced and knowledgeable traders, to save time and manage their first trades with mitigated risk.

Copy Trading on eToro allows traders to copy the top-performing traders on the platform and other traders who are involved in the Popular Investor Program, without hidden fees or management fees. You can start or stop copying traders at any time.

You can copy new trades and already existing open trades. Once you stop copying traders, all your positions related to that copied trader will be automatically closed.

eToro enables clear and transparent insight into the stats and general info about the traders from the program, so you can trade with mitigated risk and increased chances to generate profits.

CopyTrader on eToro is a trading tool that is simple to use and understand, which makes trading easier for beginners. You only need to choose a trader, or multiple traders, that you want to follow, insert the amount you want to invest and click Copy to start copy trading. You can easily quit copy trading with a single click as well. 

Related articles:

eToro vs Plus500

How to become a millionaire by 40

Lendly Loan