5 Important Things You Need To Know Before Copy Trading In Stocks

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Introduction

Are you someone looking to earn money in the highly competitive world of stock copy trading in 2021?

Do you know how you can excel as a copy trader and gain financially by following experts in the field?

Have you tried using some copy trading platforms or apps and been disappointed by their performance?

In recent years, buying, trading, and selling stocks as an investment and earning option has become quite mainstream. With global share markets on the rise, this has become a full-time engagement for many over the world.

However, as someone who has failed quite a few times before succeeding, I would like to point out that the same is not easy. In other words, being successful and making both short-term profits as well as long-term gains in stocks is quite difficult.

However, the rise of a new phenomenon, ‘Copy Trading’ is slowly turning the tide in favor of amateur and first-time traders and investors in the field.

Copy Trading: Meaning and Definition

Copy Trading is the process of imitating the buying, selling, trading, and investing patterns of an expert. This expert is simply another trader, who has vast years of experience and a high success rate when it comes to earnings in stocks, forex, and other commodities.

You simply do what the other trader does. In other words-

  • You buy stocks, which the trader/expert buys at a point in
  • You hold it till the trader/expert does it for a point in
  • You sell it when the trader/expert does the same at a given time.

Excellent platforms like etoro copy trading state that there are two kinds of major accounts when it comes to copy trading- the Master and the Follower.

List of 5 Important Things you need to know before Copy Trading in Stocks

1.   You will never know who the Trader/Master/Expert Is-

If you are someone looking to get into copy trading, you need to keep one thing in mind. The anonymity of the master will always be there. You might get a brief two-line description of his working style, trading patterns, and so on, but you will never know who the person is in detail. If complete anonymity is something you don’t care about, this will not affect you.

2.   Be prepared to lose some before you win big-

Most successful copy trading platforms that help traders win big first begin with small losses. You might be on a six to ten losing streak. This will rattle your brain as to whether you should continue to proceed. However, this is where the trend comes in and if you are lucky to catch on a trend, started by the expert, your one win will more than compensate for others.

3.   You will have to spend time, money, energy, and effort-

Even though you might think that copy trading is easy, the fact of the matter is, that it is not. Successful copy traders are always moving around their investments and latching onto everything the expert is saying. Sometimes, seconds can be the deciding factor between winning millions and losing the same. This is why you will have to spend a lot of time.

4.   The Capability of the Copy Trading Platform matters-

There are hundreds of copy trading platforms for you to choose from. However, aside from just one or two, all of them are in it to make money, without really providing any great help. ‘Etoro’ is by far, the world’s best copy trading platform, which integrated Artificial Intelligence and Machine Learning to help traders make successful copy trades.

5.   Look for Transaction Costs and other Hidden Fees-

As a copy trader, it is important that you take into consideration transaction costs and other fees. For example, any platform you use will involve a Spread Fee and an Overnight Fee. If you wish to know more about these individual fees, drop a question in the comments section below. Depending on the platform you use, the percentages of fees vary.

The Final Word

There is no doubt that there is some definite success to be had on a great copy trading platform. You can really win big if you are copying the trades of someone who is truly at the top of their game. Remember to use the best copy trading platforms to boost your chances of getting success as a copy trader.

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