To be able to use Copy Trading, you need a few necessary components. In different situations, the components may differ, but in general - Copy Trading always consists of several elements:
The market, that is, the stock exchange
When using financial instruments, it is obvious that we have access to them through the stock exchange. It can be the CFD market as well as the Forex exchange. The main and primary market where the idea of copying transactions was born is the Forex exchange (currency exchange).
As CFDs became more popular, copying traders became available on virtually all instruments. You can do it on:
► Cryptocurrencies such as BitCoin
Another fundamental element is the Broker. We cannot invest without it and therefore use the Copy Trading facilities. In the basic copy trading model, we need a broker with whom we open an investment account. We assign a copier of stock exchange transactions (forex or CFD) to the account and use it to track investors.
On the Internet, we can also find Forex brokers who provide the ability to copy transactions on their own platform. In this case, we only open a broker account. There is no need to have an additional account and transaction copier as a separate application. Below you will find a detailed description of how it works.
Trader as a provider of stock signals for copying
Such a trader is a person whom we decide to follow and copy all his stock exchange transactions. Of course, such a user should be well selected by us. Each copier and platform with this option gives us the opportunity to view various statistics and financial results of a given person.
There are several models. some platforms require a confirmed investment strategy, while others provide the sales results of a given exchange signal provider. In this case, we can view them ourselves and choose the best investor for us.
The ability to view traders' statistics is a key element of the entire process.
Trader as a copying investor
This is, of course, your role. Copy Trading is an investment process that can be performed in various ways. Each copying investor has his own preferences and a different risk appetite. Your role is to make the most appropriate decisions in terms of profit and investment risk.
The final piece of the puzzle is the Forex copying platform. Without it, the whole process would not be possible. In the past, when such applications were not available, traders used more basic tools. These were mailing lists, forums and chat rooms. Such methods were used to share information on the most lucrative transactions in the future.
As we are about to find out, there are many types of copiers for stock transactions on the Internet. Each of them has different advantages and disadvantages. You should choose yours as expected.
There are two basic models of copiers on the market:
► Copiers (platforms, brokers) that allow you to track investors within your own platform. Here we do not have to make complicated configurations and install (open accounts) in additional transaction companies.
► Copiers that exist as separate tools. They interact with many brokers on the market. They allow you to copy transactions with a broker other than ours. They are separate computer programs.
Did you know that you can… now?