Copying the trades of one trading account to other trading accounts is
called Copy Trading. This is done by using APIs. Using copy trading, one can
easily copy the trades in multiple accounts as well. Copy my trades refers to
the process of allowing other traders to replicate or mirror your trades
automatically. It is a type of social trading copy traders can follow and
automatically copy the trades of another trader. Copy trading will allow you to
receive automated signals from a signal provider and copy them into your
trading or demat account even when
you are not available at the system.
You can use the copy trading feature to trade in almost every market, such
as stocks, forex, etc. Copy trading is also considered an advanced version of
social trading stocks. Online platforms in social trading websites allow
traders to connect, share information, and follow the trades of other traders
in real-time. There are several advantages and disadvantages of copy trading
that you can consider while opting for copy trading.
Advantages of Copy Trading
There are a lot of benefits to copy trading, particularly for new traders or
those who wish to dabble in trading without making it their full-time
profession. Traders with greater experience, though, can also profit from it.
The following are a few benefits of copy trading:
- Accessibility: Copy trading is ideal for inexperienced traders because it doesn't require any prior trading knowledge.
- Access to another trader's expertise. By copy trading, you can profit from the experience and understanding of someone who has been in the market longer than you have.
- Learning from more experienced traders. You may broaden your understanding of markets and learn more by seeing more knowledgeable traders.
- Diversification of portfolio. You can access a multitude of markets and trading styles by using the signals provided by a diverse group of traders for copy trading. Even experienced traders can benefit from copy trading because it gives them access to markets they are unfamiliar with or lack expertise in.
-
Copy trading helps you to free up time. You can take part
in copy trading even if you have a
day job because it can be done entirely automatically. Alternatively, you may
spend your leisure time studying markets. It might also be devoted to your
social life or hobbies.
- It removes emotions from trading. Emotions can cause
irrational and poor deals; thus, it can be difficult to control them when you
are risking your own money. This problem is solved with copy trading, since
automated trading prevents your feelings from influencing outcomes.
- Signal providers can earn additional money from trades. In
addition to trading as a signal provider, expert traders can also profit from
copy trading. When you let other traders imitate your deals, you can increase
your profits exponentially.
Disadvantages of Copy Trading
You should be
informed of the risks and drawbacks associated with copy trading, despite its
potential for success. By diversifying your holdings and avoiding putting all
of your money in one trader, you can reduce risk. If the copy trading platform
permits it, you can also customize the risk criteria on the platform to suit
your needs. When determining whether or not to emulate other traders, take into
account the following points:
- Less control: By following other traders mindlessly, copy
trading—especially automated copy trading—removes you from control over your
money.
-
Limited learning potential. Observing more seasoned
traders can teach you a few things, but the amount of knowledge you can pick up
is rather small. Determining the reason behind the trader you are imitating's
actions and trade results might be challenging if you are not familiar with the
markets. When it comes to learning how to trade, nothing matches firsthand
experience, and copy trading just does not permit this.
- Market risk. The trader who was winning yesterday could be
losing money tomorrow because markets are unpredictable. Never forget that past
success does not guarantee future success.
- Liquidity risk. It is sometimes not possible to
execute your trade at the exact same price as the trade you are duplicating, if
at all. Market circumstances may change before your trade is executed, which
might occur due to the latency between the original transaction and the
replicating transaction. Furthermore, if no one is willing to buy or sell an
asset, neither can you sell it. Mostly when dealing with illiquid assets like
low-cap equities or exotic currency pairs, there is a risk involved. Copy
traders who are active in well-known marketplaces to minimize this danger. It
is quite rare, for instance, that you won't be able to locate a seller or a
buyer for EUR/USD.
- Systematic risk. . It covers geopolitical developments as well as other uncommon or singular occurrences that are difficult or impossible to forecast but have the potential to impact markets. For instance, the EUR/CHF currency pair had a significant decline when the Swiss National Bank abandoned the euro-franc peg back in 2015. You should understand that even an otherwise successful trader may experience losses as a result of such occurrences.
- Copy trading can be expensive. Compared to normal trading, copy trading is frequently more expensive. Signal providers may demand a substantial advance payment. Or they could charge you a commission for each transaction you duplicate. Spreads charged by your broker should also be considered since they have the potential to reduce your profits. Although following active traders is generally advised, be mindful that doing so can result in a buildup of commissions if the trader is a regular trader.
Copy Trading Software for
Indian Stock Brokers
ComBiz Services Private Limited is a well-known IT company that provides the best copy trade platform. It is a
popular copy trading service provider in India and provides copy trading for
NSE, BSE, and MCX. Copy trading services provided by them are compatible with
many Indian stock brokers, e.g., Alice Blue, Zerodha, Angel
Broking, Upstox, Stoxkart, Fyers, Finvasia, etc.
Conclusion
Copy trading offers a unique opportunity for both novice and experienced
traders to engage in the markets with minimal effort. While it provides
accessibility, diversification, and the chance to learn from seasoned traders,
it also comes with risks such as less control and market unpredictability. ComBiz
Services Private Limited stands out as a reliable platform for copy
trading in India, compatible with various brokers like Zerodha and Angel Broking.
By leveraging their services, traders can maximize their potential while
navigating the complexities of financial markets efficiently.
Related Articles:
