Copy Trading Brokers – Learn the Basics and Choose the Best Option
Online trading, a realm of potential financial growth, has gained significant popularity. For many, it’s an opportunity to augment their income. However, not everyone finds immediate success in trading profitably. Mastering the art of trading takes time, a luxury many aspiring traders don’t have.
One way to solve this issue is to use copy trading. This method automatically copies other traders’ positions into your personal trading account without the trader’s intervention. So you can trade like successful forex brokers without needing the time investment of a pro.
Best Copy Trading Brokers for 2025
Why XM?
Rating: 100% (Excellent) MinDep: $5 Leverage:1000:1 Platform: MT4, MT5 Licensed: CA, CySEC, ASIC Assets: Stock, Currencies
Why XTB?
Rating: 99% (Excellent) MinDep: $250 Leverage:30:1 - 500:1 Platform: MT4 Licensed: FCA, KNF, CySEC, CNMV, IFSC, DFSA Assets: Forex, Indices, Commodities, Crypto, Stocks, ETFs
Why bubinga?
Rating: 83% (Excellent) MinDep: $5 Platform: Bubinga Web Platform Licensed: SVGFSA Assets: Forex, Commodities, Indices, Stocks, Cryptocurrencies
Why Pepperstone?
Rating: 97% (Excellent) MinDep: $200 Leverage: 400:1 Platform: MT4, MT5, TradingView Licensed: FCA, DFSA, ASIC Assets: Forex, Indices, Crypto, Shares, Commodities
Why 8 eightcap?
Rating: 96% (Excellent) MinDep: $100 Leverage: 500:1 Platform: MT4, MT5 Licensed: ASIC Assets: Forex, Indices, Crypto, Shares, Commodities
Why AVATRADE?
Rating: 90% (Excellent) MinDep: $100 Leverage:400:1 Platform: MT4, MT5 Licensed: ASIC, CBI, FSCA, FSA, FFAJ Assets: Stocks, Indices, Commodities, Crypto, Currencies
Why FOREX.com?
Rating: 81% (Excellent) MinDep: $100 Leverage: 1:50 Licensed: FCA, FSA, CFTC, IIROC, CIMA Assets: Stocks, Currencies
Why FBS?
Rating: 84% (Excellent) MinDep: $1 Leverage: 1:3000 Licensed: CySEC, MiFID Assets: Stocks, Currencies
Why FXTM?
Rating: 84% (Excellent) MinDep: $5 Leverage: 1:30 Platform: MT4, MT5 Licensed: FCA, CySEC, FSCA, FSA, AMF Assets: Forex, Metals, Commodities, Indices, Stock baskets, Stock CFDs, Stocks
Why eTORO?
Rating: 91% (Excellent) MinDep: $200 Leverage:1:30 Platform: eTORO Trading app web platform Licensed: FCA, CySEC, ASIC, MiFID Assets: Stocks, Indices, ETFs, Forex, Commodities, Crypto **Don’t invest unless you’re prepared to lose all the money you invest.
What Is Copy-Trading – Definition and Examples
There is no straight answer to the question what is copy trading?. Simply put, it is the easiest way to participate in the market by copying the trades of successful traders. After all, the aim is the same – to make a profit.
Sure enough, due diligence is needed to find traders that performed well in the past. Here is where copy trading brokers intervene, highlighting traders with a positive track record and rewarding them for success. More precisely, brokers pay a fee to successful traders, also called lead traders, as compensation for their services of providing trades to other accounts.
But why would a broker allow copy trading? Simply put, it is a win-win situation. It means more commissions for the broker, who charges a fee for intermediation services.
Through copy trading, investors benefit from other traders’ knowledge and expertise at no additional cost. When the trader opens or closes positions in their account, these are automatically copied to the investor’s account. Moreover, the risk management system adjusts automatically.
For example, let’s assume that your broker allows copy trading. Usually, the brokerage house will highlight the most successful traders on their platform so that there is a list of names to pick up from.
Any new trades will be automatically replicated to your account after selecting the option to copy the trader’s positions. Technology allows the trades to be replicated almost instantly, with little or no delay.
However, this doesn’t mean that copy trading requires nothing else. The due diligence process of copying the proper account is very complex.
First, one needs to make sure that the risk profile is suitable. For this, an analysis of past drawdowns is required.
Second, even if a trader succeeds, it does not mean all trades are profitable. There will be periods when no profit or even losses are incurred. Therefore, the person using a broker’s copy trading function must still have some trading experience.
The bottom line is that copy trading is the simplest form of participating in financial markets. Pick an account to follow, and watch new trades open and close in your account.
Types of Copy Trading
Copy trading forex is legal as long as the brokerage house is regulated. Regulation is a must for a broker because it offers confidence to traders and investors. Moreover, brokers need to follow specific rules and conduct in a particular matter to be regulated. If, for whatever reason, the broker comes under financial stress, the regulator steps in to protect customers.
Regulation is different from jurisdiction to jurisdiction. For example, the rules established by the Financial Conduct Authority (FCA) in the United Kingdom may not be the same as the ones of the CySEC in Europe. But all regulators aim for the same thing – to bring stability to financial markets.
They increase transparency in an industry that used to be extremely opaque. Even today, some brokerage houses choose to be regulated in some corners of the world where conditions are not so stringent as in developed countries. However, from the investor’s perspective, the more the broker is regulated, the better.
Some brokers operate in more than one jurisdiction, country, or region. They must be licensed to operate there, so in many cases, they are regulated by more than one financial authority.
One thing is clear, though. To operate a brokerage house in developed countries, you must be licensed by the local regulator.
Copy trading is just an additional service offered by brokerage houses. If the broker is regulated, there is nothing wrong with providing its clients the opportunity to do copy trading.
To be regulated by the financial authority, the broker must disclose all the services and tariffs it provides and charges. Copy trading is such a service, so if regulated, the broker can offer the service to its customers. Hence, copy trading is legal in the country if the broker is regulated to offer services in the country/region.
How to Choose the Best Copy Trading Platform
Nowadays, many brokers offer copy trading as an additional service to regular brokerage services. Traders, though, have difficulty choosing a suitable copy trading service.
One needs to distinguish between two separate things: the actual copy-trading trader, also known as the copy trader, and the copy-trading provider, also known as the lead trader.
Not anyone can be a lead trader. Trading is tough, and few have what it takes to be profitable in this business.
The best copy trading app or any other platform should make it simple for you to pick the right lead trader. It should rank them based on factors such as performance, drawdown, current copy traders that follow them, historical popularity, and so on. Once again, the more transparent the trading platform is, the better.
Also, the best copy trading platform should be easy to use and set up. Moreover, it must be intuitive for the trader to set up the copy trading service.
It should have many copy-trading providers from which to choose. Ideally, ones that trade various markets so that the investor may diversify among successful strategies. Finally, it should have a long track record for all the signal providers so the investor trusts that the funds are not jeopardized.
5 Simple Steps to Copy Trade – Pro Tips and Strategies
A five-step guide for successful copy-trading should look like the following:
1. Pick the right broker
The first thing to do is to ensure the broker is the right one for what you, as a trader, are looking for. It must offer copy trading services and be regulated by the financial authority. After all, the broker holds your funds, not the copy trading provider. Also, look for funds to be segregated from the main business. Still at this step – open a trading account with the broker.
2. Browse through the list of lead traders
This task is not as easy as it may look like in the first place. Before anything, you need to define some parameters for your search. Such parameters are the risk you are willing to take, the past performance, the drawdown, the popularity with other traders and so on. All these aspects are essential, and some are more relevant than others.
For example, a conservative trader might not be satisfied with a 100% return in one year if that return was achieved with over 50% drawdown. In other words, find the copy trading provider that meets all your criteria and expectations.
3. Focus on what matters the most to you
As investors, we all have different expectations. Performance is not the only thing that matters; how it is achieved is also essential. Drawdown is important, as is the trading strategy. Sure enough, a copy-trading provider would not share the strategy with you.
However, you may filter them based on the short description that you might find. For instance, some providers trade short-term, and some others are swing traders or keep their trades open for many days or weeks. Others might be news traders. Some others might only trade based on macro ideas.
4. Fund the account and connect it with the lead trader’s account
Funding may seem like the least important problem, but often it is an issue. If you decide to copy trades from a stock market investor, you might want to know the current portfolio and size of the investment. Sure enough, the positions copied in your trading account will respect the proportions. Still, for full performance and mirroring, you’ll need to mirror the trades because the copy-trading service manages only the opened positions and the new ones. Hence, make sure to fund the account with an appropriate amount.
5. Diversify your investment by copying several lead traders
You can copy-trade more than just one trader or investor. Ideally, you should combine various strategies (short-term, medium-term, long-term) and markets (FX, stocks, ETFs) so that the trading account is well-diversified to protect you from big drawdowns. Also, this way, the dependency on any one provider is reduced.
Safety Tips in Copy Trading – Evaluate the Risk
Is copy trading risky? Investing in financial markets is risky as no success is guaranteed. Even past performance is not indicative of future success
There is also a liquidity risk, which means that one cannot exit a position quickly enough without taking some losses. Thus, make sure you are trading markets that are liquid enough to allow you to exit a position at any time without additional costs.
The idea of copy trading is to reduce all the risks. However, risks cannot be eliminated entirely. Instead, it can be diversified away by choosing a combination of successful strategies to copy.
Risk management is paramount when trading financial markets. Some copy trading platforms allow the copy trader to set the desired level of risk. If not, another way to control risk is to focus on lead traders with a history of small drawdowns.
It should be noted that copy trading does not mean that the copy trader loses total control of the trading account. New trades may be taken, independently from those taken by the lead trader, to reduce risk. For example, one may hedge a position the lead trader opened while keeping the copy trading service active.
What Else Should I Know Before I Start?
Copy trading is not for everyone, and, as a trader, you must know in advance if you have the stomach for it. Brokerage houses advertise copy trading as a simple and effective service, which it is, but trading is more than that.
Psychology plays a critical role. Sometimes, markets do not move at all. It may be that the market expects an important central bank decision or economic news and does not move. Hence, one needs to know why markets are not moving and when they are supposed to move.
Also, not all markets move in a similar fashion. The crypto market, for example, is known for its high volatility levels that exceed the volatility in the FX or the stock market. Know what to expect, have a trading plan, and follow it.
Another useful information is the fact that as a copy trader, you can still take new trades as long as there is sufficient margin in the trading account. In other words, you are not limited to copying the trades of experienced traders, but you can also do some trading on your own.
1. Social Trading vs Copy Trading
Many get confused by the two notions, but forex social trading is not copy trading. As the name suggests, social trading focuses on the social aspects of trading, such as interaction between traders, learning, etc. But traders do their own trading.
Social trading focuses on interaction and learning, with one aim in mind – to master the trading game and reach profitability in the long run. Many educational resources are available on the Internet, but interacting with other traders is just as great a tool as well.
Instead, copy trading is simply the automated replication of someone else’s trades into your own trading account. Successful traders do not share their strategies, just their positions in the market, and are paid a commission by the broker. For the one that copies the trades of successful traders, there are no other commissions than the regular ones charged by the broker.
2. Mirror Trading vs Copy Trading
The two, mirror trading and copy trading, are almost identical concepts. There is a slight difference, though, between the two.
Namely, mirror trading involves investment decisions based on algorithms. These algorithms are developed from patterns of successful traders. In contrast, the account replicates the copied trading account identically in copy trading.
3. Difference between Lead Traders and Copy Traders
A lead trader is responsible for the action in the trading account. His actions, or trades, are replicated by the copy traders.
Selecting the lead trader is a complex process. One copy trader might follow several lead traders, combining strategies and thus diversifying the portfolio. The copy trader is the one following the lead trader. Their accounts are linked in such a way that the lead trader’s positions are instantly mirrored in the copy trader’s account, respecting risk parameters and proportions in the lead trader’s account.
Pros and Cons of Copy Trading
Pros:
- The main advantage of copy trading is that it removes emotions from the trading process. The ones copying the trades have no clue why a financial asset was bought or sold and for how long the position will be held open.
- Signal providers’ main advantage is that they can complement their income with additional money paid by the broker for their successful strategy. Diversification is another pro. By diversifying the account, traders diversify the risk.
- Still, on the pro side, by using copy trading, a trader basically uses another trader’s expert knowledge. The copy trader still has the ability to close trades and open new ones, only that the system automatically takes the lead trader’s trades, too. Money management is critical as risk management is done proportionately.
Cons:
- On the downside, the trader has less control over the trading process. Past performances do not guarantee future success, as markets are hard to predict.
- Liquidity, systematic, and market risks cannot be fully eliminated. By following other investors’ strategies, one is not protected from all these risks.
- Another downside of copy trading is that the trader relies entirely on the ability of someone else to make a profit in the market. In other words, the learning process stops the moment one copies another trader’s positions.
Conclusion
Copy trading was only introduced several years ago. Technological developments allowed trades in one account to be replicated in many others. Nowadays, successful lead traders have hoards of followers and traders who copy their positions. This way, they supplement their trading income.
Despite the easiness of copying successful traders, some due diligence must be done. Copy traders should research the lead traders, their strategies, and the markets they trade in, and they should find out all about the cost of copy trading.
Summing up, copy trading is a great way to earn money in financial markets by following successful traders. It allows diversification and improves the chances of success in trading financial markets.
FAQ
Setting up a copy trading account is a simple process. First, the trader must choose a broker that provides such a service. Numerous brokers offer copy trading today.
Second, the wannabee trader must open a trading account with the broker. Next, research the strategies of successful traders offered by the broker.
Finally, connect the account with the account of a lead trader, which is usually done by simply clicking on a button on the broker’s website.
.
It depends on the lead traders followed. Usually, the broker emphasizes its best accounts and ranks the lead traders based on traits such as high performance and small drawdown.
But, that is not a guarantee that the lead traders’ performance will continue in the future.
Usually not. Most trades are copied almost instantly, and most copy-trading brokers advertise that the process takes less than a second.
It depends on your goals. Few retail traders do this for a living. In this case, copy trading is a good idea because it does not interfere with the day-to-day job, and the trader does not miss important market moves that might happen when not in front of the computer.
It is recommended for beginners. This way, they can form an idea about how to trade financial markets, what the traits of a successful trader are, and learn something about what a profitable strategy might look like.