In today's article, we will learn together what is Copy Trade? How Does Copy Trading Work? Is it a way to earn passive income?
Our Copy Trade (Copy Trading) article includes the following sections:
Part 1: Introduction to Copy Trade (Copy Trading)
Difficulties that a new Trader is facing in trading
What is Copy Trade (Copy Trading)?
Advantages of Copy Trade?
Disadvantages of Copy Trade?
Conclusion: should you use the Copy Trading model or not?
Part 2: Copy Trading Guide from Excellent Trader (this part is written with passion and based on real experience, so please read it carefully)
How to choose a good Trader so we can Copy Trade well and avoid mistakes
The platform you should use for Copy Trade (Copy Trading)
Principles of capital, profit and risk management when Copy Trading
Introducing Copy Trade products that you should Follow
Part 1: Introduction to Copy Trade (Copy Trading)
Difficulties that a new Trader is facing in trading
The financial market is a fierce and bloody battle, with the majority of up to 90% of traders failing, even losing their initial amount of money in this market within just a few weeks.
Even though we know that the financial market is high risk, do many people still continue to enter the financial market after losing disastrous battles?
That's because 5-10% of people who make money in this financial market are very rich and their investment income is very large compared to the remaining 90% of people.
Everyone who participates in the financial trading market makes a trade-off between losing money and being in the group of 5-10% of successful investors.
Financial trading always attracts those who like challenges and risks.
Because a financial trader wants to live a comfortable life in terms of money and time and not be constrained by anything.
However, how can you enter the financial investment market without having the knowledge, experience and time to invest? When an investor without knowledge and experience just steps into the market, he or she will be a lamb among a pack of old wolves. Just throw money in and Auto will lose. Because reality shows that it takes a lot of time for a new person to gain knowledge about investing, investment principles, and control trading psychology, and you have to trade in money, time, and energy to get it. own investment skills. In addition, there is another fact that with the same amount of research, practice and money spent, there are people with natural talent who succeed faster and earlier than the rest of the new investors.
While successful investors often have fixed trading principles that rarely change too quickly and are very disciplined, control their trading psychology very well and are ready to stop loss, which many people know. but still can't do it.
All of this creates an overall picture of the investment world, 90-95% of investors lose money in the market, only 5-10% can actually make money.
But today with the development of technology and great minds, a person without knowledge, experience and trading time can still invest and make money successfully in the financial market with Copy Trade.
What is Copy Trade (Copy Trading)?
Copy trade (Copytrade), also known as Copy Trading, is a form of copying the transactions of excellent traders. The investor's account will copy the entire order of a Trader that the investor has chosen to Copy Trade at the correct account rate. Then when the trader loses, the investor also makes a loss, and when he profits, the investor will also earn profits.
Any trading actions performed by Pro Trader such as opening orders, Stop loss, closing orders will be performed in the copier's account proportionally between the two accounts.
Specific example: Account A has a total of 100,000 USD and a profitable trade of 150,000. If account B copies account A and has the same capital of 100,000 USD, it will also have a profit of 150,000 USD. Account C also copies but with only 10,000 capital, it will still make a profit of 15,000 USD.
Investors can still cut orders to take profits or losses at their discretion or stop Copy Trading at any time.
Things a professional trader must do: Monitor the market, Plan transactions, Monitor orders, manage orders, Capital management, Emotion management, Risk management, Regularly research and learn , learn from experience to perfect trading methods,...
These are things that you don't have to learn to be good at and proficient at.
With Copy Trading, you don't need to be good at all of those things to still make a profit because there is an expert Trader to do everything for you.
Advantages of Copy Trade (Copy Trading)?
The main advantage of copy trading is the opportunity to make money from the financial markets with limited trading knowledge. As new traders achieve profits, they become more confident and inspired to improve their trading knowledge further, because they understand that it is indeed possible to have a successful trading career .
Information Transparency
Save time: Copy trading frees up time for both new and experienced traders. Even investors with busy schedules can earn in the market without having to monitor the market all day
You can choose a Trader that suits your trading preferences and risk tolerance
Will become passive income if you find good traders
Disadvantages of Copy Trade (Copy Trading)?
It will be very difficult to evaluate a good Trader option to follow long term. A Trader is at the top of the rankings today but yesterday and tomorrow may be different. That top trader may have a good chain of orders, and this can catch you off guard and lead to large losses of your money or even burning your account.
Risk occurs when a trader's trading method becomes risky leading to the risk of losing your capital. Sometimes you won't understand why a trader doesn't bet on money but you do when they use tricks or play DCA while your capital is too small compared to them.
Conclusion: should you use the Copy Trading model or not?
My answer is yes, but be a smart Copy Trade investor, many people make the mistake of thinking that Copy Trade is very easy, just choose the Trader you like and Follow to get passive income. That's true but it's not easy. So, continue reading the second part of the article below to make difficult things easy
Part 2: Copy Trading Guide (this part is written with passion and based on real experience, so please read it carefully)
How to choose a good Trader so we can Copy Trade well and avoid mistakes
Here I will guide you to choose a perfect investor to copy trade on any exchange. However, some floors may lack some functions, you should consider carefully before deciding because the money is always in your pocket.
A perfect investor must be someone who fits your investment style, has a clear investment strategy, tolerates a moderate level of risk, has good capital management and must be considered over a period of time. The reference period is long enough. Considering these criteria, I have the following advice:
Look for traders with as long a trading history on that exchange as possible. Unless you know that person well from before, because in reality there are people who have been trading for 10 years but their account is only used to let other people follow. It's only been a few months, but maybe that's the trader we should be looking for. Theo dõi. Otherwise, it is best that the trading record is as long as possible, as this allows you to evaluate the ability of that Trader to survive well in all difficult market conditions (bullish and bearish markets).
Trader searches give relatively stable results over time (months or years). For example, select by month. Trader A profits 3% (or 200 pips)/1 month relatively consistently throughout 12 months compared to Trader B who makes 10% (or 600 pips)/1 month for 6 months and another 6 months a loss of 7% (or 200 pips)/1 month then we should choose Trader A. When you look at historical Trading charts, consistency is shown by an increasing chart like the example in the image below. A chart with many irregular spikes is a sign of traders who are unstable in trading. If you choose by year, you can compare profits between years. However, this is not necessarily the most important criterion because the market is constantly changing, so this month and that month is completely normal, but over the year, the more strict you are, the better.
Look at the number of people following Trader. As much as possible. However, remember that you shouldn't use this as your only important factor. Because in some special cases, I will still ignore this factor.
Are Traders willing to risk Followers' money for commissions? If you observe during difficult trading times of a currency pair that the Trader does not trade regardless of the huge volume, then that is a good Trader, there are Traders who place 10 orders a week and all 10 orders win. But sometimes during those 2 weeks, that trader enters small volume orders or does not even place orders because during those 2 weeks it is very difficult to trade and the possibility of winning is not high. This is a difficult criterion to evaluate that requires your attention
Look at the trading strategy and description in the Trader's profile. Is there a clear strategy? Using automated trading signals or are they trading manually? If a trader is using a bot system and automated strategies, try to determine whether they are monitoring the trading system well or not. No trading system is perfect and only rely on historical data to trade. Therefore, no one can predict how a Trade system may perform in future market conditions, but professional Traders will know good capital management to withstand all market circumstances. .
Does the trader have a view to set Stop loss or not? Setting a stop loss is used to manage the risk of a trade (i.e. maximum loss per trade). The distance of the Stop loss levels allows determining the level of risk. No stop loss means unlimited risk. You should avoid traders who do not use Stop Loss
Look at the Win rate and RR rate of that Trader: there are only 2 types, 1 is high Win rate but low RR, 2 is low Win rate but big RR. Copy which style you like. Any trader who bets sometimes like this and sometimes like that, without making it clear, should ignore it
Look at how traders behave during and after they have a losing streak? When trading on a series of winning orders, it is quite easy. However, no one can always accurately predict the market, so a losing streak of Traders may happen at some stage. This is where good traders demonstrate their most important qualities. Will they panic and change their trading system in a panic or will they stay calm? Are they showing signs of chasing their losses (e.g. trading more frequently in an attempt to quickly win back losses), or are they sticking to their tested principles and systems? Are not? A very important factor for us to know whether we should Follow that Trader or not!
Know when to cut portfolio losses. This is a parameter that you can set before copying a certain Trader's transaction. If a Trader trades poorly and changes his trading method too frequently and many times, be ready to leave him. Quitting unsuccessful traders will help you free up capital to invest in more successful traders. Don't be afraid of making a mistake when Copy Trading someone, we will not be 100% correct when choosing a trader to Follow.
Choosing a Short-Term/Medium-Term or Long-Term Trader? Each trader or investor has a preference for different trading time frames, some people don't want to open too many orders because it involves transaction fees, others don't want their money stuck in the market. orders, they want to see money quickly so they make continuous transactions in a short period of time. Therefore, choose a Trader whose time frame trading style suits your wishes.
The platform you should use for Copy Trade (Copy Trading)
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Control Investment Capital, Profits, Risks and Notes to avoid losing money unfairly when Copy Trade (Copy Trading)
Initial investment capital:
You should only invest a maximum of 5-10% of your capital, and invest in other channels to diversify your investment portfolio. Do not invest ALL IN to avoid putting all your eggs in 1 basket
At first try $500 to $2000 depending on each person's conditions and then gradually increase if you find the trading system is ok.
Set a Follow order cut of about 30-50% depending on the Trader's trading strategy and your psychological tolerance threshold.
Controlling profits and risks is a very important step, because profits always come with risks
Continuously monitor and update your weekly and monthly profit and loss results
Wishing you success
Source: https://trungvanhoang.com/copy-trade-la-gi-huong-dan-copy-trading/