Copy Trading

Copy trading is the practice of replicating another trader’s positions, using social platforms, automated tools and signals. Copy trading is popular among forex traders and is widely used within popular third-party platforms, including MetaTrader 4.  We’ll cover the meaning of copy trading along with its key features. We’ll also look at the pros and cons, plus list the best copy trading platforms on the market.

There is a vast range of copycat trading brokers out there, offering both proprietary and third-party copy trading platforms. Some cryptocurrency brokers and exchanges are also catching up and beginning to provide their own social and copy trading tools, including Coinbase and Binance.

Above we’ve put together a list of the best brokers with copy trading support. Remember that it’s always important to do your own research to find which one would be best for you.

What Is Copy Trading?

Copy trading allows individuals to automatically or manually copy another trader’s positions when they are opened or closed. Traders communicate their positions using signals via a social network or forum, where followers can copy the methods.

The definition of copy trading is closely linked to mirror trading, although the difference with copy trading is that traders are blindly copying trades, rather than actually replicating top strategies.

Traders can copy positions in many markets, including forex, stocks and CFDs. You can also copy trades on popular crypto coins including Bitcoin (BTC) or major precious metals such as Gold or Platinum.

eToro copy trading
eToro copy trading Past performance is not an indication of future results.

How Does Copy Trading Work?

Copy trading allows you to connect a part of your portfolio with someone else’s, where any opened trades and future actions are automatically copied to your account. This can be a great way to diversify a portfolio, for example, a trader might consider following a long-term investor in the stock market.

Followers need to choose how much to invest and can always choose to fund more or less, depending on the success of the trader. However, copy trading can involve risk, so traders should always carry out their own research and understand how it works before committing capital.

Note that whilst some platforms may allow you to have some control over your funds, some may operate on a fixed system. A fixed system will allow you to stop copying a trader but it is unlikely that you have much control elsewhere.

ZuluTrade copy trading
ZuluTrade copy trading

Copy Trading Platforms

Depending on the broker, copy trading can be offered either through a proprietary software, or through a third-party platform such as those listed below. Some brokers also offer additional research tools or networking forums, such as Telegram or TradingView.

Copy Trading With MetaTrader 4

MT4 has been set up so you can mirror the trades and strategies of successful traders. Select the Signals tab from within the platform for access to over 3,200 free and paid signals from top forex providers. Traders are ranked in order of results, so it’s quick and easy to choose a provider and select your parameters. You can then start copying trades in both live and demo settings.

Copy Trading With MetaTrader 5

Similar to MT4, you can automatically replicate the trades of others on the MT5 platform. Masters and followers do not need to be signed up with the same broker – the MT5 platform connects traders across continents and brokerages. Subscription prices are fixed in the MT5 market place and rapid data exchanges help to reduce execution delays.

Copy Trading With cTrader

Another popular platform is the integrated cTrader solution. Once clients have opened an account, they can navigate to the Copy area to explore available strategies and compare the history, risk appetite and fees of providers. Clients decide how much they want to allocate to mirror a particular trader, and are free to copy multiple providers simultaneously.

Copy Trading With DupliTrade

DupliTrade offers leading automated copy trading technology. Users have the flexibility to select what proportion of trades they’d like to copy, and the option to scale up and down. Users can copy trades in forex, stocks, indices and commodities markets. Those wishing to sell their trades have to pass a rigorous audit progress while clients are presented with all the facts and figures they need to make an informed decision.

DupliTrade copy trading
DupliTrade copy trading

Copy Trading Vs Social Trading

Social trading focuses more on gaining ideas and insights from different websites and services in order to develop new strategies, share tips and invest in tools. Copy trading is more focused on replicating trades and profiting from the results only.

Beginners or new traders may want to start with social trading to help them understand market behaviours and trends, before committing to copy trading. Companies such as Liteforex for example, offer comprehensive networking tools which provide valuable exposure to complex strategies and market research.

Trading Screens copy trading

Copy Trading Cryptocurrency

Cryptocurrencies are a relatively new entrant to the financial markets, offering volatility and profit potential. Many providers are quickly working to offer copy trading on leading crypto coins, including Bitcoin, Ethereum and Litecoin. Much like you would copy forex positions, users can mirror trades on crypto only pairs plus crypto and fiat currency pairs.

Leading providers, such as eToro, offer copy trading on cryptocurrencies, along with dedicated crypto platforms, such as Coinmatics and 3Commas. The latter two offer intelligent crypto copy trading robots that quickly execute market positions in real-time. Clients benefit from a user-friendly dashboard to follow their investment.

Copy Trading App

One of the benefits of copy trading is that you leave the heavy lifting and analysing of the financial markets to others. As a result, it’s quick and easy to manage your copy account and track results from your mobile.

MetaTrader 4, MetaTrader 5, eToro and many more popular providers offer downloadable mobile apps for iOS and APK devices. One installed, clients can compare traders, consider strategies, fund their account, and start copying trades in a few clicks.

Copy Trading Strategy

It’s important to consider how your own trading strategy aligns to that of providers you wish to copy. This will help to ensure there isn’t a major disparity in risk tolerance, for example.

Important strategy considerations include:

  • Risk – Quantify your risk appetite – how much market volatility are you willing to accept and what alerts and tools will you put in place to manage your risk?
  • Markets – What financial markets do you want to invest in? Forex, stocks, indices, commodities and cryptocurrencies are all popular markets. It’s important to understand the market you wish to invest your money in.
  • Fixed or flexible – How much control do you want to have over your capital? Fixed and fully-automated copy systems will see you mirror trades with minimal control or input. Those wanting more influence and control may want to opt for a more open and flexible system.
  • Research – There is a danger with copy trading that clients won’t do their due diligence before investing large sums of money. It’s important to not only carefully research providers before you sign up, but also to regularly monitor trading performance once your capital is on the line.
  • Leverage – Leveraged copy trading lets you increase your position sizes with small capital outlay. This means you can increase your profit potential and diversify your portfolio by mirroring the trades of multiple providers. Leverage rates vary depending on your jurisdiction, CySEC regulated providers, for example, cannot offer more than 1:30 leverage.

Copy Trading Signals

As the name suggests, signals are essentially indicators that followers can use to take a position on the markets. Once you’ve received a signal, you can then edit your settings and trading parameters in line with your strategy. Signals tend to offer more flexibility than fixed and automated copy trading. You may want to edit your trade size, stop loss and take profit levels before you execute trades.

MetaTrader 4 and MetaTrader 5 are two leading signal providers, with thousands of top traders offering free and paid alerts.

Pros Of Copy Trading

  • Good for beginners – one of the main benefits is the convenience of having someone else do the work, which means you don’t have to be a copy trader guru or expert to take part. It’s also great for any trader who doesn’t have the time to commit to full-time day trading.
  • Demo accounts – some brokers offer demo copy trading accounts, which are ideal for new traders who want to browse the platforms first. Demo accounts are free of charge, risk-free and often provide access to useful research tools.
  • Authorised practice – copy trading is generally recognised by key regulatory frameworks, including CySEC, ESMA, MiFID and the FCA. Choosing a licensed and reputable broker will ensure your funds are safe and not exposed to scams.
  • Portfolio diversification – traders can gain exposure to opportunities or trends that they wouldn’t usually consider without the help of another trader’s expertise.

Cons Of Copy Trading

  • Risk – the risks can be high even if you choose an experienced trader to copy. If a strategy is unsuccessful, the risk will also translate onto a follower’s account and can result in a financial loss.
  • Control – one of the main disadvantages is the lack of control a trader will have once they begin copying an account; traders are essentially entrusting their portfolio to a stranger.
  • Fees – depending on the broker, copy trading may involve fees. For example, OctaFX clients pay a Masters’ commission which is specified individually and charged in USD per lot of traded volume. There will also be a minimum deposit amount to invest in a trader. At eToro for example, the minimum amount is $200.
  • Not widely available in the United States (US) – copy trading is generally not available to US residents due to the Dodd-Frank Act, which put restrictions on lenders to protect US consumers from abusive practices.

How To Open A Copy Trading Account

To open a copy trading account, you need to sign up for a live account with your chosen broker. Make sure to check your broker’s regulation status beforehand as this will determine the level of security and fund safety provided.

Traders need to deposit funds into their accounts in order to invest in another account. Depending on your platform, you may need to link your copy investing system to your live account once you receive your login details. The broker will usually provide a guide on how to do this.

Once your accounts are set up, you can start copying trades. We recommend utilising any video tutorial guides beforehand; some brokers offer easy-to-follow YouTube videos, for example. The eToro copy trader guide also provides useful research and content on how to start and apply risk management tools such as Copy Stop-Loss (CSL).

Copy Trading Reviews

Use this table with reviews of the top copy trading brokers to compare all the copy trading platforms we have reviewed. Note that some of these might not accept traders from your country. If we can determine that a broker would not accept your location, it is marked in grey in the table.

Copy Trading Platform and Broker Reviews
Broker Demo Min Dep. MT4 Bonus
AAAFx Yes $10 Yes Yes
Absolute Markets Yes $50 Yes Yes
Admiral Markets Yes $100 Yes No
AdroFX Yes $25 Yes Yes
AMarkets Yes $100 Yes Yes
AvantGardeFX Yes $500 Yes No
AvaTrade Yes $100 Yes Yes
Axi Yes 0 $/€/£ Yes No
Axiory Yes $10 Yes No
Ayondo Yes $100 No Yes
BDSwiss Yes 100 $/€/£ Yes No
BinaryCent Yes $250 No Yes
BlackBull Markets Yes $0 Yes No
Brokereo Yes $250 Yes No
CMTrading Yes $100 Yes No
Deriv.com Yes €/£/$5 No No
Dove Options No 500 Yes No
eToro Yes $10 No No
EuroTrader Yes $0 Yes No
Expert Option Yes $/€10 No Yes
Fair Forex Yes $50 Yes No
Finveo Yes $100 Yes No
Fondex Yes $0 No No
ForexChief Yes $10 Yes Yes
FP Markets Yes $100 Yes No
Fusion Markets Yes $0 Yes No
FXCentrum Yes $10 No Yes
FXChoice Yes $100 Yes Yes
FXCM Yes £300 Yes No
FXDD Yes $/£1 Yes No
FXPIG Yes $200 Yes No
FXPrimus Yes $15 Yes Yes
FXTM Yes From $50 Yes Yes
FXTrading.com Yes $200 Yes Yes
Fxview Yes $200 EU clients, $50 global clients Yes No
GemForex Yes $1 Yes Yes
Global Prime Yes AUD $200 Yes No
GO Markets Yes $200 Yes Yes
Golden Brokers Yes $100 No No
GoStreams Yes $100 Yes No
Hantec Markets Yes $10 Yes No
Huobi Yes $100 No Yes
HYCM Yes $100 Yes Yes
IC Markets Yes $200 Yes No
ICM Capital Yes $200 Yes No
IFC Markets Yes 1 USD / 1 EUR / 100 JPY Yes Yes
Infinox Yes £1 Yes No
InstaForex Yes €200 to €50,000 (depending on account type) Yes No
IQCent Yes $250 No Yes
JFD Bank Yes $500 Yes No
Just2Trade Yes $100 Yes Yes
JustForex Yes $1 Yes Yes
Kucoin Yes $0 No Yes
LH Crypto Yes €10 No No
LiteFinance Yes $50 Yes Yes
M4Markets Yes $5 Yes Yes
Moneta Markets Yes $50 Yes Yes
MTrading Yes $100 Yes Yes
MultiBank FX Yes $50 Yes Yes
Naga Yes $250 Yes Yes
NordFX Yes $10 Yes Yes
NPBFX Yes $10 Yes Yes
OctaFX Yes $100 Yes Yes
OpoForex Yes $100 Yes Yes
Optimus Futures Yes $500 Yes No
Pepperstone Yes $500 recommended Yes No
Pionex No $0 No No
Pocket Option Yes $50 No Yes
PrimeXBT No 0.001 BTC No No
ProOption24 Yes $200 No Yes
PU Prime Yes $50 Yes Yes
Public.com Yes $0 No No
RaceOption Yes $250 No Yes
RoboForex Yes $10 Yes Yes
RoboMarkets Yes $/£/€100 Yes No
Skilling Yes 100 EUR/USD/GBP or 1000 NOK/SEK Yes Yes
SquaredFinancial Yes $100 Yes No
Superforex Yes $1 Yes No
Switch Markets Yes $50 Yes Yes
ThinkMarkets Yes $0 Yes No
Tixee Yes $250 Yes Yes
TMGM Yes $100 Yes Yes
TopFX No $50 Yes Yes
TP Global FX Yes $200 Yes Yes
Trader's Way Yes $10 Yes Yes
Tradeview Yes $100 Yes Yes
TrioMarkets Yes $500 Yes No
Vantage Yes $200 Yes Yes
Videforex Yes $250 No Yes
VT Markets Yes $200 Yes Yes
XBTFX Yes $5 Yes No
XM Yes 5 $/€/£ Yes Yes
Zenfinex Yes $50 Yes No
ZuluTrade Yes Broker choice dependent but balance on ZuluTrade should exceed $100 Yes No

Copy Trading History

Early history

Internet trading platforms have made copy trading very easy, but the concept of copy trading predates the internet. You used to be able to subscribe to trading signals through phone and regular mail.  These services were often expensive and were commonly scams that provided little value to investors.  The services were usually advertised in regular newspapers to target less sophisticated investors.  You were required to make the recommended transactions yourself once you received the signal.  Signals sent through the mail were usually several days old when they arrived at the subscriber.

Early Internet trading

Copy-trading online can trace its roots to subscriber newsletters and IRQ chat rooms. Individual traders shared their trades by writing about them in the chat room or by sending out a newsletter to their subscribers. Traders later started to use private forums in the same way. Investors who wanted to copy these trades needed to make sure to read the announcement as soon as possible and then manually execute the trade. They did not receive any notifications if they did not visit the chat room or read the newsletter. Copying the trades required effort by the copying trader. Some of these newsletters, chat rooms and forums were available for free but most required you to pay a monthly fee to get access to the information posted. Traders were often able to comment on the trade and post questions to the people they copied.

The fact that traders needed to execute all trades manually created a large barrier to entry for traders who wanted to use these services. It was not possible to be a passive copy trader. If you wanted to copy another trader, you needed to monitor the trades shared actively and manually perform the transactions.

Automated trading

Some traders realized that improved internet technology opened the door to improve this type of trading by creating trading software for automatic replication of online trades. The first fully automated copy trading solutions were introduced to the market in the middle of the noughties.

An example of one of the first automatic trading systems for copy trading was called Mirror Trader. Mirror Trader was introduced by Tradency in 2005. Mirror trader made it possible to connect your own trading account to the software to automate the trading fully.

Mirror Trader also allowed traders to host their own trading strategy on the system, and other users could choose to copy the trades generated by that strategy. Mirror Trading recorded and displayed the trading records of each trading strategy. This allowed traders to make an informed decision before they chose to mirror another trader’s strategy. This made Mirror Trader by Tradency a much safer alternative than many other services that provided their own, often fraudulent, trading history.

Mainstream popularity

Copy-trading became an increasingly popular service, and many online trading platforms and brokers added some type of copy-trading feature. Most of them added this feature after 2010. Some brokers have since retired these services.  FXPro is an example of this. They shut down their Supertrader feature in 2017.

Copy-trading has traditionally been most prevalent on the Forex market, but regulatory bodies have instituted stricter rules which have caused forex copy trading to become less popular.   Copy-trading has, at the same time, become increasingly popular among stock traders and other types of traders as well. Etoro has played a large role in making copy trading as popular as it is today. They introduced and trademarked their copy trading system in 2012. Copy trader now has more than 135 000 different traders that you can choose to copy.

Final Word

Copy trading can be a great way for beginners to gain exposure to the markets and profit with minimal effort. It also allows traders to experience the successes and failures of trading, by observing the actions of others. However, it can involve risk and quite often very little control, so whilst there can be success stories, copy trading doesn’t work for everyone.

FAQ

Is copy trading legit?

Copy trading is a legitimate system offered by many licensed brokers and recognised by various regulators. Traders should consider a respected brand to increase fund security. Use our list of the best copy trading platforms to trade safely.

Is copy trading good?

Determining whether copy trading could be good or bad for you will depend on several factors. Copy trading can be a useful tool for beginners or traders who don’t have a lot of time to track the markets themselves. However, copy trading generally does not give you a great deal of control and can involve risk if your trader’s strategy is unsuccessful.

Where is copy trading accepted? 

Copy trading is widely available in many areas, including the UK and Europe, plus Canada, Latin America and multiple countries in Asia and Africa, such as Hong Kong, Indonesia, Malaysia, Philippines, Kenya and South Africa.

What is the best copy trading platform in 2022?

An overall favourite among traders for social and copy trading is award-winning brokerage, eToro, which has been cited by numerous online reviews. For those who wish to use popular third-party platforms, AvaTrade or Pepperstone are also good choices.

Use our top list of copy trading brokers to compare all platforms that support copy trading.

Is copy trading Halal? 

Some brokers offers Islamic (swap-free) live accounts, which comply with Sharia law. You can get in touch with your broker to find out if copy trading is supported in your account.

Yes, as long as your chosen broker accepts clients from Singapore.

Yes, but check with your broker for any restrictions that may apply to your country of residence.

Copy trading may be restricted due to local law. You can contact your broker for more information.

Further Reading