Did you ever glance at a classmate’s answers when you were taking a test in school? Unlike in school, copying isn’t considered cheating when it comes to
Quick Look: The Best Copy Trade Forex Brokers
- eToro – Open an account
- Hot Forex
- Vantage FX
Copy Trading and Forex: The Basics
Copy trading is considered an offshoot of social trading. Social trading is a concept in which novice traders quickly increase their forex or stock market earnings by imitating seasoned traders. To do it, you might seek out a few experts whose trading style or strategy you want to copy. From there, you can use one of two methods:
When you copy trade, you set up your account to copy certain orders from one or many expert traders. Copy trading actually involves linking part of your account to the account of the expert you want to imitate.
Mirror trading does not involve linking your account to an expert’s account. Instead, you set up your account to completely copy (or “mirror”) all trades from an expert.
Let’s invent an expert trader — Frank Forex. Frank Forex has a solid history of great returns in currency trading. Frank’s strategies are complex, so instead of learning them yourself, you just hitch your wagon to Frank’s cart.
To copy trade with Frank Forex, you’ll link a portion of your account (minimum and maximum amount will differ by broker) to Frank’s. When Frank makes a trade, your account makes the same trade in proportion. Most brokers have the option of copying certain types of trades or all the trades made in the linked portfolio.
If Frank Forex has a down year, you can choose to unlink your account with his and move on to Cindy Currency, the next high-rising trader you’d like to emulate.
What to Look for in a Copy Trading Forex Broker
Copy trading works differently depending on the broker you choose, so make sure you do your research. The platforms vary, but the best copy trading brokers do have a few things in common. Look for the following features when making your choice:
Low minimums are always a good feature to have in a forex broker, but we aren’t talking about minimums to open an account or execute a trade. Each broker has a minimum amount that must be put into an expert’s portfolio in order to copy their trades. Make sure your broker doesn’t have minimums that force you into copying only one or two other traders.
One of the appeals of copy trading is you don’t need to do the research yourself. So why would you want to spend a lot of time troubleshooting trading software? Pick a broker with a simple interface and fast trade execution.
Diverse Network of Traders
Diversification isn’t just for your 401(k). Social trading is a brewing phenomenon and a strong user base is the key to any social network. This is even more critical when you’re copy trading forex. Anyone can scroll through a list and copy the traders with 90% win rates in the current month. You want to be able to tap into a diverse network of traders who are practicing different strategies in different markets.
Remember that copy trading doesn’t just net you free money. Even the best traders go through long, cold streaks and they might have more capital to burn than you do. Copy trading is a way to avoid the nuts and bolts of the forex market, but it’s not an excuse to be ignorant. Try to learn why the traders you copy make their moves.
The Best Copy Trading Forex Brokers
Using the criteria listed above, Benzinga has chosen the five best copy trading forex brokers available today. Use these five as a starting point for your research, but remember, not every trader has the same needs.
Touting itself as the largest social trading platform on the planet, eToro is the giant in the space with clients in 140 different countries. eToro has a firm handle on the stock, ETF, commodity, currency and cryptocurrency markets.
Major forex pairs are limited to 30:1 leverage, while minors get 20:1, commodity CFDs get 10:1 and you can also get 5:1 on stock CFDs. (Note: U.S. traders only have access to cryptocurrencies.)You’ll need $200 to open a copy trading account.
Social trading takes shape in a
HotForex is an acronym for Honest, Openness and Transparency. It might sound corny, but HotForex is a terrific broker with a dozen trading platforms and leverage up to 400:1 on copy trading. You can trade forex and bitcoin in the HFcopy account, which requires only $100 to open as a follower. (It’s $500 to be a strategy provider.)
The HFcopy account can be accessed through MetaTrader 4, WebTrader, and HotForex’s mobile trading app. You can copy up to 300 open orders at once and trade size minimums are 0.01 units. Strategy Providers can have up to 30 followers and performance fees for providers can each up to 50%.
Vantage FX is a Australian-based ECN forex broker which offers deep liquidity and lightning-fast trade executions. ECN stands for electronic communications network and it’s a series of interconnected banks and liquidity providers that match buyers and sellers of different currencies.
Unlike a market maker, an ECN broker doesn’t act as a counterparty to your trades, it finds a suitable seller on its complex network. ECNs are more transparent, have lower spreads and execute trades far more quickly than market maker brokers.
Vantage FX uses ZuluTrade and MyFXBook Autotrade for its social trading functions. Using ZuluTrade, clients have access to 120 different forex pairs and CFDs with leverage up to 500:1. It costs $200 to fund a social trading bankroll, but you can access ZuluTrader right from your MetaTrader 4 platform and choose from over 10,000 traders to follow.
MyFXBook Autotrade is a program for mirroring different traders’ portfolios based on strategies. Low-performing accounts are screened out of the platform so only traders with repeated success can be copied. As an added bonus, no extra download is required; you can trade right on your browser.
Pepperstone is another Australian forex broker that has ventured into the social trading scene. Founded in Melbourne in 2010, Pepperstone has become one of the most diverse and sophisticated brokers on the forex market. Not only are MetaTrader 4 and 5 supported, but Pepperstone features the powerful cTrader program, one of the few true rivals to MetaTrader.
The social trading platform uses six different programs to enable copy trading: ZuluTrade, MetaTrader 4 Signals, Mirror Trader, MyFXBook, Duplitrade and RoboX. You can copy trade in real-time or automate your entire operation with these programs. You’ll choose from either a spread-only (standard) or commission (Razor) account.
Get Started Copy Trading
If you’re new to the currency trading game, it might be hard not to feel like you’re at a disadvantage. If you can’t beat ’em, why not join them? Copy trading allows you to do just that.
Just remember that copy trading isn’t a shortcut to riches. You’ll still need to pick the right broker and understand the concepts at play when trades are posted to your account, otherwise you’ll likely get burned. If you want to get started copy trading, first open a demo account at one of the brokers listed above. You won’t risk any money and you’ll learn what types of trades you want to emulate.