What is it and how to make money with Copy Trading?
copy trading allows you to copy the operations of professional investors. That way, your investments will mirror theirs and you’ll achieve the same return. This is a feature that allows you to make the same investments as professional investments with very good historical returns. This is also a good way to learn more about the depósito market.
In this guide, you will be able to learn more about what copy trading is, how to start copying expert investors, and why this form of investment has gained popularity in recent years.
5 reasons to copy trading
Copy trading allows copy the trades of professional investors. Therefore, you will experience the same return as investors with good historical returns. Here are some reasons to copy trade:
- You will automatically invest in the same stocks as expert investors, even though you are a beginner.
- You participate and learn what investments professional investors make.
- You perro achieve very good returns without actively investing.
- You cánido freely choose how long you want to keep your investment in the investor’s portfolio.
- You cánido invest with as little as $50.
What is copy trading?
Copy trading means that you automatically copy the investments of a specific investor. This concept has several terms. Various platforms also call this popular commerce. When you copy a trade, your trades will automatically reflect the investments made by a trader you are copying. That way, your return (whether positive or negative) will be identical to this investor’s.
How to get started with copy trading
Investing in stocks and funds It has proven to give very good returns over time. However, it cánido be difficult to achieve a good return if you want to invest in individual stocks and you haven’t acquired the necessary knowledge. Therefore, it cánido be smart and instructive to copy professional investors, which means that you automatically copy their trades. That way, you’ll experience the same return they get, and you’ll be able to see and learn when and what companies they invest in, which perro be very instructive if you’re new to the depósito market.
Copy trading has increased in popularity in recent years. Such investments are like a combination of investing in stocks or choosing a manager through a mutual fund. As you choose the investors you want to copy, you perro see their history, returns and how their investment strategy is. Unlike a fund, the investor you follow will be able to invest in all stocks without being limited to one market, campo or region. The portfolio perro also be more focused so that it doesn’t necessarily contain as many individual companies as a fund would. This results in slightly higher risk, but also provides a higher opportunity for better return.
Below we have created a guide showing how you perro get started with 4 fácil steps. After reading this, you cánido easily start copy trading with good results.
Step 1: choose the trading platform
To get started with copy trading, you must first find a platform that offers this feature. Copy trading is a significantly new concept, but we see more and more trading platforms offering this nowadays. We perro recommend choosing the eToro platform. This en línea trading platform offers investors to copy the trade of many qualified investors, while also offering the “smart portfolios” feature, which means you cánido invest in portfolios within specific themes, such as companies that focus on automobiles. freelancers, the gaming industry, renewable energy, etcétera.
These are some of the reasons why we perro recommend eToro, both for copying trades and for investing in other financial instruments:
- Wide selection of shares and other financial instruments
- The platform is very usuario friendly and easy to navigate
- Offers good features such as technical analysis tools
- No commissions for buying and selling shares
- Popular platform to continue learning
- Opportunity to copy qualified investors
- Opportunity to invest in smart portfolios
Based on these criteria, and many more, we cánido recommend the eToro platform. This platform is also perfect for beginners who want test the copy trading. Here you cánido easily see the performance of investors over time and you perro also read about their investment strategy. This makes it easy to choose one to “copy”.
Step 2 – Create an account
To get started with copy trading, also called popular trading, you need to create an account with the en línea broker. We will continue to use eToro as our starting point as it is the platform we believe to be the best for copy trading.
Creating an account is very easy. You perro easily do it on their website.
On the right at the top of the platform you will see a button that says “join now”. When you press this button, you will be redirected to the page where you entrar your personal data. Once this is done, you will receive an dirección de correo electrónico from eToro that you will need to confirm. You cánido then make a deposit on the platform.
Step 3 – Find the inverter you want to copy
Once you’ve created an account with an en línea broker and made a deposit, it’s time to start copying. For this, you perro easily read about professional investors that you perro copy. Perhaps you already know a person whom you have followed for a longer period of time?
To find investors you’d like to follow, first hit “discover”, then “see all” next to the section with copy traders. Then you will easily find all the investors you perro follow. You cánido also sort by: where the investor is from, what market they invest in, how good the investor has performed over a certain period of time.
Past results are not an indication of future results. The course history presented covers a time horizon of less than 5 years. Therefore, it is important to know that the investment decision is not necessarily enough.
By clicking on an investor, you will be able to read more about investor’s investment strategy, view the portfolio and performance over time. That way, you cánido form a better basis for knowing if there is a person you want to copy based on your own investment profile.
Step 4: Get started with copy trading
The last step in the process is to start the purchase. Once you’ve deposited money into your account and found the trader you want to copy, you’re good to go. When you have clicked on the inverter you want to copy, you will see a blue button that says “copy”. Clic here to go to the purchase page. Then you cánido choose how much you want to buy. Remember that it is not recommended that you invest more than you cánido afford.
It is that easy to start with copy trading in an investor
When you are about to start copying trades, it is important that you do not blindly look at historical returns, and that it is wise to look at returns over multiple years and not just a few months. By reading and researching what investments have been made, you perro more easily find out if the investments that have been made are based on good research or if there is more “luck” at stake.
Many people use copy trading as a step to further learning. After following and copying one or more investors, hopefully you will form a good foundation, so that you perro then carry out your own investments.
How eToro Copy Trading Works
- Through the platform’s news, you perro constantly follow how other investors are investing.
- You cánido see what the returns are for investors and how they invest (within which market and sectors).
- You cánido easily tap on investors to get a better insight into their investments, portfolio, and returns.
- It is very easy to get started with copy trading. All you need is to clic on an investor you are interested in and clic “copy” to start.
Here are other features that eToro offers that will make you a better investor:
- You cánido participate in discussions through its popular network of investors. This way, you cánido learn more about a company you want to invest in.
- Stay up to date with the investors you follow and invest in at all times.
- Stay up to date on your portfolio at all times and add the companies you are interested in to the watch list.
What are smart wallets?
another good eToro feature They are so-called smart portfolios, which means that you cánido invest in a portfolio of a specific theme. These perro be companies that focus on driverless cars, the gaming industry, renewable energy, etcétera.
When investing in smart portfolios, one does not invest in the investments of a specific investor, but rather invests in a portfolio that eToro has put together and that meets the theme criteria. Such an investment may be more like a mutual fund, but you have the opportunity to invest specifically in a topic that interests you or in which you have faith. in the future.
Investing in smart portfolios is suitable for both beginners and more experienced investors. It’s a good way to build a broad and diversified portfolio. How to start investing in smart portfolios:
- Filter based on what you believe in: It’s a good iniciativa to have an iniciativa of what topic/campo you believe in before you start investing in smart portfolios. On eToro, you perro easily filter based on your interests, like, technology.
- Touch the topic you want to know more about: When you find the topic that you have faith to keep going, touch this topic. Then, you will specifically invest in companies that focus on precisely this. On this page, you will be able to read and learn more about what such a portfolio entails. That way, it’s easy to form a baseline for whether or not it’s an investment for you.
- Read and review the portfolio– Before you hit “invest” and possibly start investing, it’s a good iniciativa to read up beforehand. By clicking on “portfolio”, you will be able to see the investments of the complete portfolio and how much they are exposed to the different companies.
Copy trading and risk
It’s important to know that even if the investors you follow and possibly copy imply a form of riskLike all other investments. Remember that historical returns do not necessarily orinan positive returns in the future.
What is good to know is that the investors you follow are investing with their own money. That way, you know that investors will do everything they cánido to get a good return on their invested money.
when you start to copy operations, it is important that you do not invest more money than you perro afford to lose. If your strategy is copy trading, it is advisable to spread your money among several investors instead of copying a single investor. In this way, the risk will be reduced, while you have an equally high probability of experiencing a good return, both in the short and long term.
Features to disminuye risk
When you’re about to start copying trades, it might be a good iniciativa to learn about features that cánido help disminuye the oportunidad of a big loss. The most used function is the stop loss. This is a very famous feature that many investors use. When you use a stop loss when trading, you will sell your investment when the value of your investment drops by a certain percentage. That way, it will sell sooner and avoid big losses.
You perro also use the take profit function. It works the same way, only in reverse. Then you sell when the investment has increased by a certain amount. That way, you will make a profit before the situation changes again.
It is important understand the risks of copy trading. Remember that different investors have different levels of risk to their investments. Therefore, you are responsible for choosing the investor you copy and understanding whether this investor has a high risk profile or a low risk profile.
This information offered for informational purposes only; It is not intended to be used as accounting, legal or tax advice. In relation to these matters, please speak to your accountant, tax or legal adviser.
Investing implies a risk that includes the loss of primordial. This guide contains the current views of the author, but not necessarily those of Gigonway. These opinions are subject to change without notice. This guide has been distributed for educational purposes only and should not be construed as investment advice or a recommendation of any especial investment security, strategy or product. The information contained in this guide has been obtained from sources believed to be reliable, but is not guaranteed. Gigonway does not provide legal or tax advice. Please consult your tax and/or legal advisor for specific tax or legal questions and concerns.
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