What is copy trading?

Copy trading allows participants to replicate the trades placed by other, often more experienced traders in real time. The idea is to find a trader with a proven track record and begin copying their trades.

When we talk about copy trading, there are usually three parties involved:

• Provider: This is the trader whose trades are being copied. Sometimes they are also referred to as a "Master Trader" or "Signal Provider".
• Copier: This is the person copying the provider's trades, using their own trading account.
• Broker: The broker provides access to the copy trading platform (like an app or MetaTrader 4) which allows the provider and copier to connect.

How does copy trading work?

• Brokerages provide a copy trading software or application. In the app, traders that are copied are known as ‘signals’, while their followers are known as ‘copiers’.
• Traders sign up with the brokerage and link their accounts to the copy trading app.
• As the signals trade and build a track record, their performance data, including monthly returns and profitability, can be monitored through the app.
• Copiers select which signals to follow. Once a copier connects to a signal, every transaction executed by the signal is automatically replicated in the accounts of their copiers, proportionally adjusting for factors like available funds and risk preference.
• In return, the signal trader charges the copier a percentage of the profits.