Financial markets, including the forex market, provide various facilities to their users so they can earn income in many aspects while being attracted to these markets. Copy trading system is one of the favored tools and systems for many forex traders that some brokers such as Trendo broker offer to users. In the copy trading system, as the name suggests, trades are copied into the accounts connected to one account. Further, we will explain more about the copy trading system, its advantages, and disadvantages.
In the copy trading system, a successful and professional trader trades on his account, and the transactions are copied to the accounts of the people connected to his account. In this system, investors connect to the account of a successful trader, and each transaction that the trader makes is automatically copied to the investor's account.
A trader who trades in a copy trading account is called a copy trading account manager, and the copy trading account investors are those that copy trading account manager's trades are copied in their accounts. As mentioned, every transaction the copy trading account manager makes is also done in the investors' account. For example, when the manager opens a buy position in the gold symbol, it is also opened in the investor's account, and when the manager closes the transaction, it is also closed in the investor's account, and when the manager's account makes a profit, the investor's account also makes a profit.
Note that in the copy trading system, investors can control their accounts. For example, they can close the transactions the account manager does in their accounts or not allow new transactions. In a copy trading account, investors usually control and monitor their account, and only the trades of the copy trading account manager are copied to their account.
As mentioned, the account manager and investors cooperate on a broker's platform in the copy trading system. Further, we will learn about the traits of managers, investors, and brokers in the copy trading system.
Trader or copy trading account manager :
Users with high trading skills and ability in trade and a positive trading outcome can use the copy trading system of brokers to attract more capital for their transactions and take over the copy trading account management.
The account manager or copy trading trader specifies his proposed plan and terms of cooperation to attract investors on the broker's secure platform. In this proposed plan, the account manager can make statements on various situations such as trading fees for investors, trading strategy, how to manage capital, his experience as a trader, trading results, etc., to attract capital.
In addition to earning profit through trading, the account manager in the copy trading system can earn good additional income by attracting investors. The account manager or trader receives a fee for making transactions for investors. The fee amount can differ depending on the copy trading account type, conditions, and the broker's copy trading system.
Copy trading investors:
Users who, for reasons such as lack of skills, time, knowledge or experience, etc., do not want to do the transaction themselves, but would like to earn money from financial markets such as Forex, can invest in Forex Copy Trading without having trading skills. Investors can invest in the secure space the broker provides, by reviewing the conditions, including the fee and the copy trading accounts' resumes. Investors should pay attention to the partnership terms with the trader, how to manage the copy trading account, and points such as his trading strategy and capital management when choosing a copy trading account. That is why selecting a copy trading account with high risk puts investors' capital at risk, don't just pay attention to the trades' outcome and be sure to pay attention to the mentioned conditions.
Brokers provide a secure platform for the investors' and traders' partnership in the copy trading system. Also, brokers create a space for communication between account managers and investors. In this space, investors choose the appropriate copy trading account manager by examining the traders' copy trading accounts in terms of profit and loss, the longevity of the copy trading account, the number of investors, etc.
Traders and investors should be careful in choosing a broker for a copy trading account because any problems occurring while doing transactions in a copy trading account will cause losses to both parties. Among the brokers' common issues in providing copy trading account services, are the low speed in making transactions of sub-group accounts, activation of transactions with delay and at a different price for traders and sub-group accounts, and failure to activate transactions during high market fluctuations, etc. In this case, traders and investors can choose the Trendo broker copy trading system without worrying about the speed and security of trades and experience the unique joy of partnership in trading.
As mentioned, choosing the right broker that provides a suitable and advanced platform with high security in copy trading is important. Because if the trades are not copied correctly, it may cause loss to the investors and the account manager. For example, in a broker, the trader or the account manager buys gold at $1820, but due to the low speed of copying the trades in the broker, the buy might be done at $1822 in the investor's account.
Therefore, in choosing a broker for copy trade , the account manager and the investor should be careful enough and ensure the security and speed of the broker's copy trading system.
Usually, brokers have different rules for copy trading. The biggest difference between brokers' rules is in the type and time of transaction fee payment between the account manager and the investors. Brokers define special rules for account managers and investor groups that every person should read carefully before opening a copy trading account. Most brokers only offer copy trading systems for PAMM accounts.
In the PAMM account, investors connect to a successful and capable trading account with specific conditions and in an agreed-upon method. In the PAMM account, the trader's transactions will be exactly copied and carried out in the investor's account, and the investors will deposit the specified and agreed percentage of the transactions' positive outcome in a specified period to the trader's account as a fee.
The account manager determines his transaction fees for investors in the proposed plan and affiliation conditions. The account manager or trader receives a certain percentage of profit from the transactions closed with profit from the investors' account as a fee. But if the transactions are closed at a loss, the account manager does not gain anything or receive a payment. The PAMM account manager's fee can be variable, this means that the PAMM account manager or trader can determine the cost in different ways. For example, people with more capital usually pay a lower fee to the PAMM account manager or trader.
Click here to read about what a PAMM account is and how it works, and its advantages and disadvantages.
In addition to providing a PAMM account, Trendo broker provides another copy trading system type called copy trade account.
In this type of account, investors will connect to a successful and capable trader account with a specific fee , and like the PAMM account, the trader's transactions will be exactly copied and carried out in the investor's account. In the copy trade account, investors pay their membership fee to the trader monthly. In the Trendo Copy Trade account, investors pay their membership fee to the investment manager with a fixed amount monthly, and unlike the PAMM account, the amount of commission received by the account manager is unrelated to the amount of profit and loss resulting from transactions.
In choosing a copy trading account, the trader (account manager) and the investor must note some important points. Further, we will discuss the most important features of the copy trading account that must be noted.
Broker or trading platform: the most important point that traders and investors should pay attention to is choosing a reliable broker and platform. A platform with high speed, accuracy, and security in executing transactions and offers the lowest spread and fees. Also, traders and investors should be able to cooperate transparently on this platform. The broker must consider the interests and financial security of the investors and the account manager.
Trendo Broker has provided one of the best copy trading platforms for traders and investors.
Reliable and professional trader: Investors should be extremely careful in choosing a trader or copy trading account manager, and in choosing a trader, they should consider general points such as continuous profit and long-term returns, number of transactions, risk and capital management, trader's score, the fee amount and the partnership terms. Investors should consider all the mentioned points and must not pay attention only to the amount of profit because the trader may have reached a high profit by not observing capital management and high risk. Therefore, investors should note that capital is at risk in high-risk transactions.
Ability to attract investors: Professional traders who can manage a copy trading account should choose a platform for copy trading that can advertise and introduce them easily to attract capital.
Trading risk in the forex market and the reasonable profit expectation: the forex market has risks like any other financial market. Both investors and traders should pay attention to the risk of transactions and their losses in addition to the situations and opportunities for profit. Also, they should not expect high and unreasonable profits from the forex market because big profits multiply the possibility of capital loss. Therefore, one should have reasonable and realistic expectations of trading profit.