Nov 18 2019 0
Copy trading is currently the top choice of forex investors. It is the perfect way to make some profits from the forex market without spending too much time learning and practicing trading forex. But now the question has to be asked: How much do you profit from copy trading? Is it the same as forex trading? Let’s find out the answers today.
What is copy trading in forex?
Well, the name says it all. Copy trading is when you copy everything in a trader’s account you choose. Every order they make. Every position they open. Everything. Thanks to copy trading, you now don’t have to spend time and effort learning forex trading. You just need to know how to invest properly. You are not a trader anymore. You are now an investor.
The process of copy trading is super simple as well. Just log onto a copy trading platform. Pick a strategy provider. Let your account copy them automatically. Stop copying when you want. That is how simple it is.
How much do you profit from copy trading?
In copy trading, the amount you earn depends on the ratio between your initial deposit and that of the strategy provider. For example, if you deposit $300 in the account while your provider deposits $600, the ratio is 1:2. You earn half of the profit they make. If they make $1000, your profit from copy trading is $500.
How to succeed in copy trading
Like I said earlier, this is not a trading game any more but an investing game. You have to apply investor’s strategy to copy trading if you want to make money. Once you log on to a copy trading platform, you will find hundreds of providers there. How can you tell someone worth investing in apart?
Well, in terms of investing, you have to pay attention to 3 aspects of an investment.
The aspect investors care about the most whenever they are about to invest in something is the profit rate of their investment. The higher the profit rate, the more exciting that deal is. There are many copy trading platforms that show the profit rate of providers directly on the home screen as they know it is one of the most important factors.
Moreover, some platforms even let you view the last trades of an account so you can be sure that the profit rate is real or not.
Profit rate is calculated by the ratio between your funds and your profits.
Risk score is just as important as profit rate when it comes to an investment. Risk score is often measured in percentage. It will tell you how likely you will lose all your money if you invest in a strategy. Risk score can be calculated by the ratio between how many times you lose. For example, if you lose half of your total number of trades, the risk score is 50%.
For investors, you should choose providers with risk score under 30% to be safe. Anything over 50% is considered too risky.
Of course you’re not copying them for free. Providers will charge you commission. Commission is usually in the form of percentage of the profit of every trade. Anything less than 30% is acceptable.
That’s our take on copy trading. We hope that now you have the answer for “How much do you profit from copy trading?”