Is copy-trading the best way to trade forex?

Trading forex is no longer solely the domain of sharply dressed men on bustling trading floors. Technological developments have made this market accessible to homes and offices around the world, and many are capitalising on the opportunity to grow their investments, writes FXTM’s Senior Writer, Samantha Robb.

Forex is the largest of the financial markets, with a daily turnover estimated to be in the region of US$5 trillion. Governed by political, economic and geographical factors, it’s also one of the most difficult markets to navigate. It might hold huge potential for gains, but there is also the potential for huge losses. Understanding the myriad of nuances of this market is far from easy. But there is an answer for investors looking for a less demanding route into the world’s most liquid market; copy-trading. Whether you are a seasoned professional, a tennis player or a lorry driver, the introduction of copy-trading platforms has made forex trading accessible to most aspiring investors. 

Copy-trading is essentially the act of investing a percentage of your capital into a trading account run by a strategy manager. In return you receive a portion of any profits made by that account. A study by Roder and Walter (2017) looking into the increasing popularity of copy-trading and/or social trading, found that it was the ease of use and broad appeal that made these platforms so attractive to investors.  

Copy trading answers the demands of experienced traders looking to diversify their portfolio and bring in a greater revenue. It also appeals to those keen to enter the financial markets but currently lack the knowledge or confidence to do so. Copy trading gives investors the freedom to invest in an account that reflects their own investment objectives and risk profile, while handing over the technical side of trading to traders with experience of the markets.

Being able to see a trader’s past performance is crucial to the success of copy-trading platforms. It provides a bench mark for an investor to understand the account’s progress and a way to measure growth potential, as well as assess the risks to their investment capital. 

FXTM’s copy-trading programme, FXTM Invest, provides investors with access to 600 accounts, with strategy managers ranked based on their overall profitability, since the account was created. Each account, or Strategy Manager, has their own page where Investors can find a thorough breakdown of the account’s success measures, including: risk level, analysis of wins/losses, profitability history and a calculator to measure any potential profits based on current statistics. The platform gives investors the ability to compare and narrow down their search with ease, helping them find their perfect forex match. 

Is the perfect investment partner out there waiting for you? Discover a Strategy Manager suited to you with FXTM Invest

Disclaimer: This article comprises of personal opinions and ideas. It should not be construed as containing investment advice and/or solicitation for any transactions in financial instruments and/or a guarantee or prediction of future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available, and assume no liability as to any loss arising from any investment based on the same.

Risk Warning: Trading Forex and CFDs involves significant risk and can result in the loss of your invested capital. You should not trade unless you fully understand the true extent of your exposure to the risk of loss. When trading, you must always take into consideration your level of experience. If the risks involved seem unclear to you, please seek independent financial advice. Please read FXTM’s full Risk Disclosure.NOTES TO EDITORSFXTM brand is authorised and regulated in various jurisdictions.

ForexTime Limited is regulated by CySEC (185/12), licensed by FSB of South Africa (FSP No. 46614) and registered with FCA of UK (600475). FT Global Limited is regulated by the IFSC of Belize (IFSC/60/345/TS and IFSC/60/345/APM).

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