Digibits Network Limited

How to Trade Forex Socially & Copy Trade Forex

A trillion dollars worth of currency is traded every day on the forex market, making it the world’s largest trading sector.

The difficulty of making consistent profits for complete beginners, however, lies in the fact that forex trading requires a solid understanding of technical analysis.

In this way, copy trading allows beginners to trade currencies passively by mimicking the positions of experienced investors.

Thus, this guide explores the best forex copy trading platforms available today.

Review of the best Forex copy trading platforms

A number of factors should be considered when selecting the best forex copy trading platform.

Firstly, you should have a good understanding of what forex trading is all about. This should initially focus on the copy trading tool itself – such as the number of investors that can be copied and whether additional commissions will be charged.

However, investors should also explore metrics surrounding the underlying broker, such as the supported forex markets, fees and spreads, and minimum deposits.

Forex

How does Forex Copy Trading work?

A forex copy trade enables investors to replicate the trading positions of a currency trader who has experience trading the currency. For example, if the trader goes long on EUR/USD and closes the position a few hours later at a profit of 1%, the exact same trade will be replicated. A key benefit of this is that forex investors of all skills can day trade passively.

As a result, the investor does not need to have any previous experience trading forex. In order to consistently trade forex successfully, a solid understanding of technical analysis is necessary. By reading and analyzing forex charts and trends using technical and economic indicators, this technique can be used.

What is Copy Trading Forex?

The Forex copy trading market offers a passive investment opportunity in experienced currency traders.

There are, however, risks associated with forex copy trading, so we will discuss how it works in this section.

Platforms that are proprietary versus those that are third-party

First of all, forex copy trade tools are either proprietary or offered through third-party platforms.

  • In the case of eToro, which we found to be the overall best forex copy trading platform, proprietary software is offered.
  • Forex trades can be copied without using a third-party platform.
  • eToro is a fully-functioning brokerage platform that offers copy trading tools directly on its website.
  • Forex traders can trade nearly 50 of the best pairs with eToro on a spread-only basis.
  • Following the opening of an account, investors have all the tools they need to start copy trading forex.

Forex copy trading platforms that do not provide brokerage services, on the other hand, are rare.

To use copy trading tools such as MT4, DupliTrade, or ZuluTrade, investors need to open an account with a broker.

Choosing a Forex trader

As we briefly mentioned above, choosing a suitable trader to follow is the most important step in copy trading.

In addition, the past performance of a trader is no guarantee that they will continue to be profitable in the future.

To help investors find a suitable trader, the best copy trading platforms offer a wide range of filters. For example, eToro’s handy filters let investors see the following metrics:

  • Monthly performance of the trader since joining eToro
  • Based on the eToro algorithm, the risk score of a trader
  • Whether a trader is engaging in day trading or swing trading can be determined by the average trade duration
  • To date, the largest drawdown has been
  • Classifications and markets of preferred assets
  • An overview of all positions that have been entered and closed
  • Followers and assets under management

Also, eToro allows its verified copy traders to write up a full biography, which provides key information about the trader’s experience, strategy, financial goals, and risk tolerance.

Some copy traders on eToro even hold monthly webinars to discuss past results and future goals with their followers.