Copying a Forex or Equities trader may very well be the best way for a beginner to learn how to trade. Of course, different people have different learning styles so this approach may not be suitable for everyone. However, it is useful for new traders to try copy trading and see how things work.
The copy of a trader means directly opening all the current and future operations of that trader. Once you decide to copy a trader, all his current trades are opened. In a sense, copying a trader means investing a portion of your portfolio in that person.
When opening a trade, the amount to invest is a percentage of the amount that the trader to copy has invested in relation to his entire portfolio. This means that if your portfolio is, for example, € 1,000, and you have invested € 100, we will also automatically invest 10% of our capital for every trade we open. If he loses, we lose too, and if he wins, we too win.
There are several platforms that allow you to do this type of trading. Some allow you to have more control, while others restrict movement. It is usually not possible to invest your entire portfolio in a single trader. Otherwise, a trader's wrong choice could cause significant losses. Furthermore, there is always a risk and diversification helps reduce it.
When you do copy trading, in fact, you must always be careful, because it can also be harmful to your development as a trader, if at some point you leave the chosen trader; or you can lose money if you are not careful, as no matter how good a trader is, he too is bound to make mistakes, so notice when things are going wrong and leave the ship on time.
If you are good at reading trader profiles, you can become one of the many traders who have already created people-based portfolios. This means that you will not be investing directly in stocks or Forex, but in people. If all the traders you have chosen are good and consistently make a profit, then you too will do the same, obviously in proportion to the different invested capital.
The positive side of this approach is that you won't need to study technical or fundamental analysis. If you are good at analysing profiles, then it is possible to make money simply in this way, with "copy" trading allowed by special specialized platforms.
It is also possible to copy trading using your demo account, until it comes time to start trading with real money. Learn as much as possible if you want to become a good trader. Copying someone's trading can really help with that (if they're good, of course). Follow in their footsteps, try to predict their moves, in short, use them in an educational way.
