Binary Options Copy Trading

Binary options copy trading is a hands-off approach to investing that involves replicating the positions of other traders. But whilst often touted as a straightforward way to produce profits, wins aren’t guaranteed. Here, we explain how binary options copy trading works and we list the best brokers and software in 2022.

Binary Options Copy Trading Explained

How Binary Options Work

Binary options are a class of derivative instrument that let you speculate on financial markets by selecting from one of two possibilities. This is often likened to answering a “yes or no” question about whether the value of an asset will rise above or fall below what is known as the strike price. If you correctly predict the answer, you will earn a predetermined, percentage payout of your stake. If not, you will lose your entire investment. This leads to their other name, “all or nothing” options.

There are several popular contract options:

  • In/Out – Whether the asset’s value will be within two strike prices at the expiry time
  • High/Low – Whether the asset’s value will be greater or lower than the strike price at the expiry time
  • Touch/No Touch – Whether the asset’s value will reach a certain price at any point before the expiry time

How Copy Trading Works

Copy trading, a form of social trading, involves following and imitating other investors. This is often automated through dedicated copy trading tools within existing platforms. This means you can simply assign funds to copy other traders at the exact times they open or close positions.

With binary options copy trading, this process is available on software that supports the purchase of these derivative contracts. More specifically, if a trader you copy purchases a contract, your account will purchase the same contract at the same time, with the same strike price and expiry time.

Binary options copy trading brokers
Pocket Option copy trading

Supporting brokers generally allow you to search through a wide array of expert traders, with full histories of their options types, assets, strike prices and success rates. You may have reduced buying power and wish to stake less capital than the expert, so you can set a percentage or value limit to be used for copy trading.

Getting Started

Use this step-by-step guide to start trading:

  • Find a brokerage that facilitates binary options copy trading and create an account. Keep in mind that not all platforms offer binary options and not all brokers allow copy trading. See our list of supporting platforms.
  • Connect a payment method or pre-fund your account so you can copy the expert’s trades as soon as they purchase a contract.
  • Identify other clients and traders that you wish to copy. Often, brokers will have a leaderboard-style page on their website with details of different people to help you decide. We recommend that you do not copy just one trader as you would be solely dependent on their success. Following several traders will spread your risk.
  • Sit back and wait for positions to expire and check their outcomes.

Comparing Brokers

Price

One of the most important factors to consider when weighing up different copy trading binary options brokers is costs. These could be in the form of trading fees, subscription charges to access expert traders or lower percentage profits per trade.

Any fees can easily build up and quickly eat into profits. However, there can be a correlation between higher costs and greater quality. Therefore, you need to determine what you would be comfortable paying for the service.

Platforms

Software tools for binary options copy trading are less important than other forms of short-term speculation, such as CFD day trading. However, it is important to ensure that a broker’s trading platform is both effective and easy to use.

Ideally, the software should have an intuitive interface, provide you with all the required information on potential master traders and allow for easy contract purchase. Furthermore, if you plan to do any market analysis yourself, ensure that there are suitable technical indicators and graphical objects.

Best binary options copy trading brokers
Videforex copy trading software

Customer Support

A broker’s support structure can have a large impact on your experience binary options copy trading. If you are having issues that interrupt your trading, any time lost means that you are, in effect, losing money.

Being able to access 24/7 support, either via live chat or over the phone, can help to solve problems quickly, so you can return to executing trades as soon as possible. Look out for contact methods that you prefer to use, such as email, alongside long office hours and language options.

Reviews

It is difficult to understand how a particular broker operates by only reading the website or looking at the app. You may, understandably, have questions over how trustworthy and reliable a platform may be. There are many websites, forums and binary options trading clubs online that can help with this.

The best ones will host plenty of discussions, where you can read about other traders’ opinions and experiences with particular platforms. See our list of the best binary options copy trading brokers with accompanying reviews.

Comparing Binary Options Copy Trading Experts

You need to evaluate the different expert traders available for copy trading. Master traders will have a direct impact on your success, so this is not a decision you should take lightly.

Profitability

One of the two key considerations is how successful they have been so far. While past performance is no guarantee of future performance, you probably want to avoid a trader who is out of the money in four of every five trades.

Experience

When deciding between expert traders, look at how many trades they have made and how long they have been going. You can place more confidence in experienced investors, assuming that they will understand binary options well enough to not make rash decisions that lead to large losses.

Risk

Before you start copy trading binary options, you should determine what level of risk you are comfortable with. While copying riskier expert traders may lead to greater profits, you can just as easily, lose your capital.

Pros

There are many benefits to binary options copy trading:

  • Simplicity
  • Saves time
  • Easy to understand
  • Earn as trader and copier
  • Learn from successful traders
  • Limited technical analysis required

Cons

There are also drawbacks to binary options copy trading:

  • Disconnect between you and your capital
  • Some experts charge high commissions
  • Assets limited in certain jurisdictions
  • Profits not guaranteed
  • Easy to overlook risks
  • Potential for scams

Final Thoughts

Binary options copy trading offers a hassle-free approach to financial speculation. The potential to lower risk by mirroring positions opened by experts is attractive, though you should not be fooled into thinking that this is always safe. You should research thoroughly to find the best expert traders possible and, even after selection, you should be proactive and continually review your trading activities.

FAQ

What Is Binary Options Copy Trading?

Binary options copy trading involves mimicking the positions taken by other clients on your platform. This can be done manually or automatically, assigning your full account capital or just a portion to copy the contract details purchased by expert traders. This means that if they purchase a high/low option at a certain price, your account will do the same, taking away the effort of manually analysing the markets.

Yes, copying the trades of binary options is legal and facilitated by some of the best brokers. However, the sale of binary options themselves is restricted in some regions.

How Do I Become An Expert Binary Options Trader?

Firstly, you need to be a trader that others will want to copy from. This means demonstrating that you know how to make consistently profitable trades. Once you are confident, you need to apply to your desired broker with a verified account. Ensure that you meet the platform’s criteria for expert traders. You will often need to provide a description to advertise yourself, including your chosen trading strategy and experience. Some software may let you set your own commission rates.

Where Can I Find Advice On Binary Options Copy Trading?

There is a plethora of trading communities and clubs online where you can discuss binary options copy trading. Forums such as Reddit and groups on social media websites are great ways to seek trading advice, regardless of how niche the topic you are searching for is.

Usually, retail traders aim to only risk around 1% of their account, with a maximum of 3% if they accept higher risks. However, the best advice is to only trade with what you would be comfortable losing.