Trades
Copy Trading
Copy trading is a method of trading in which investors, often beginners or those lacking time to actively manage their investments, automatically copy the trades of more experienced traders. Here's how it typically works:
Selection of Traders
Investors choose experienced traders to copy. This selection is usually based on various factors such as past performance, risk tolerance, trading strategy, etc.
Allocation of Funds
Investors allocate a certain amount of funds to copy the selected traders. The proportion of funds allocated to each trader can vary based on the investor's preferences.
Automatic Replication
Once the funds are allocated, trades executed by the selected traders are automatically replicated in the investor's account. This means that whenever the selected trader opens or closes a position, a corresponding trade is executed in the investor's account.
Risk Management
Some copy trading platforms offer risk management tools that allow investors to set parameters such as maximum trade size, maximum loss per trade, etc. This helps investors control their risk exposure.
Monitoring and Adjustment
Investors can monitor the performance of the traders they are copying and make adjustments to their portfolio accordingly. They can add or remove traders based on their performance and changing market conditions.