Are you wondering if going into copy trading would be a good idea? While not everyone needs to do copy trading (successful traders can very well trade themselves without copying anyone else), copy trading lets beginners make money in the stock and other financial markets rather quickly.
Copy trading is a good idea. While most traders lose money with regular trading, copy trading allows you to replicate the trades of someone successful for years. You can also get started right away with a small sum of money and earn passive income quickly.
Today, we will be discussing whether copy trading is a good idea or not. You will learn about why it might be a good strategy and some things you should look out for when getting into copy trading. Let’s get started with six reasons!
IMPORTANT SIDENOTE: I surveyed 1500+ traders to understand how social trading impacted their trading outcomes. The results shocked my belief system! Read my latest article: ‘Exploring Social Trading: Community, Profit, and Collaboration’ for my in-depth findings through the data collected from this survey!
Table of Contents
6 Reasons That Make Copy Trading a Great Idea
Most Traders Lose Money With Regular Trading
That might sound harsh, but the reality is that the large majority of traders — especially forex traders — lose money in the long run. That number might even be as high as 97 percent. But how can you make sure that you are not in that majority of traders losing money and that you end up in the minority that makes money?
One thing you can do is copy the trades of someone who is in that coveted three percent. Since you will be executing the same exact trades as them, you can almost guarantee income. Copy trading is an excellent “hack” that lets you separate yourself from most traders who don’t know what they are doing and follow in the more successful people’s footsteps.
You Will Save Time
One of the most common reasons people can’t make money with trading is time (or lack thereof). Now, that is understandable if you trade yourself, as it takes time to look at the charts and watch them to learn whether to buy or sell a stock, crypto asset, or currency pair.
Copy trading, however, eliminates this problem. All you have to do is get your copy trading account set up, and you are ready to earn some cash. You don’t have to spend time looking at the charts or making trades yourself because your chosen trader is doing that for you. That way, you can go about your normal everyday life without worrying about the market.
It Is Passive Income
Have you ever dreamed of earning passive income? Well, copy trading is one of the best and quickest ways to do that.
Let’s take affiliate marketing as an example of passive income. It takes time to build a website that gets a lot of traffic and converts sales. Until the dollars start rolling in, you will spend more time working on the site than sitting in the green. Copy trading, on the other hand, allows you to start earning passive income very quickly.
For another example, let’s compare it to renting a house or apartment. You need a lot of money to invest in real estate. Sure, real estate is a great way to earn passive income, but you need a lot of capital to start before it becomes profitable.
The same is not true of copy trading, where you can get started with very little down. Many platforms allow you to begin trading with just $200 in your account. And as you earn money, you can invest more and start earning even more.
You Don’t Need Any Experience
In the standard stock market, you are likely to lose money without trading experience because there is always a learning curve involved, regardless of whether you prioritize stocks, forex, crypto, or anything else. There is no learning curve with copy trading, and you don’t need any experience to earn money!
That’s because you are relying on the experience of your trader to earn a profit. You don’t need to go through the frustrations of losing money while still learning how to trade. You can start earning money now — not three years from now.
You Can Trade Anything
Most traders specialize in one type of trading. For example, some people are experts at trading forex, but they don’t know how to make money in the stock market. Other people are making big money in the stock market, but if you put them in front of a forex trading screen, they would not know where to begin. The same goes for crypto.
The explanation is simple: it takes time and effort to learn how to trade something, and most people don’t have enough time to do that. If you decide to trade yourself, you may want to consider becoming an expert in just one thing.
However, you don’t have this problem with copy trading because you can trade whatever your trader is. That means you can trade forex, stocks, and crypto at the same time. And you can switch from one type of trading to another without having to go through a whole new learning curve all over again. In short, copy trading makes your life easier and gives you a lot of flexibility that you wouldn’t otherwise have if you traded on your own.
You Can Leave Emotions Out of the Picture
New traders face this more often, but even experienced traders make this mistake once in a while. We call it “following your emotions”. In particular, we’re talking about greed and fear (fear of losing, to be more precise).
Greed may cause you to buy a stock or asset when it is high, even though it might be nearing the end of its bull run. This is also called FOMO, or fear of missing out, which is never good because it will cause you to get into something when the time has already passed. You should get over your fear and wait until the price dips, which it usually will, before you decide to buy.
On the other hand, fear of loss may cause you to sell an asset when it is going down, even though you know that this is only a temporary dip. At other times, it is essential not to be stubborn and to sell before the price goes to zero, which can happen with some cryptocurrencies. It is essential to follow your brain and your trading strategy and not your emotions when trading.
When you are copy trading, you don’t have to worry about this, because the trader you are copying knows to follow their emotions and trade with logic. You will be copying their trades automatically, so you won’t have to worry about letting your emotions take control. On the contrary, you can spend time away from the screen knowing that your money is in good hands.
Of course, it is possible to get scared and suddenly pull your money out of your copy trading account too. You are allowed to do that, and there is nothing that is stopping you from giving up on copy trading altogether. However, that is not as big of a risk, as for the most part, you can rely on the trader you chose to copy to do the right thing (as long as you are confident that you chose the right trader to copy). Stick to copy trading for the long term and be patient.
Author’s Recommendations: Top Trading and Investment Resources To Consider
Before concluding this article, I wanted to share few trading and investment resources that I have vetted, with the help of 50+ consistently profitable traders, for you. I am confident that you will greatly benefit in your trading journey by considering one or more of these resources.
- Roadmap to Becoming a Consistently Profitable Trader: I surveyed 5000+ traders (and interviewed 50+ profitable traders) to create the best possible step by step trading guide for you. Read my article: ‘7 Proven Steps To Profitable Trading’ to learn about my findings from surveying 5000+ traders, and to learn how these learnings can be leveraged to your advantage.
- Best Broker For Trading Success: I reviewed 15+ brokers and discussed my findings with 50+ consistently profitable traders. Post all that assessment, the best all round broker that our collective minds picked was M1 Finance. If you are looking to open a brokerage account, choose M1 Finance. You just cannot go wrong with it! Click Here To Sign Up for M1 Finance Today!
- Best Trading Courses You Can Take For Free (or at extremely low cost): I reviewed 30+ trading courses to recommend you the best resource, and found Trading Strategies in Emerging Markets Specialization on Coursera to beat every other course on the market. Plus, if you complete this course within 7 days, it will cost you nothing and will be absolutely free! Click Here To Sign Up Today! (If you don’t find this course valuable, you can cancel anytime within the 7 days trial period and pay nothing.)
- Best Passive Investment Platform For Exponential (Potentially) Returns: By enabling passive investments into a Bitcoin ETF, Acorns gives you the best opportunity to make exponential returns on your passive investments. Plus, Acorns is currently offering a $15 bonus for simply singing up to their platform – so that is one opportunity you don’t want to miss! (assuming you are interested in this platform). Click Here To Get $15 Bonus By Signing Up For Acorns Today! (It will take you less than 5 mins to sign up, and it is totally worth it.)
Conclusion
Copy trading is a good idea because it lets you get started without any prior experience. It allows you to earn passive income right away without investing a huge sum of money upfront. It also allows you to avoid letting your emotions trigger financial loss!
BEFORE YOU GO: Don’t forget to check out my latest article – ‘Exploring Social Trading: Community, Profit, and Collaboration’. I surveyed 1500+ traders to identify the impact social trading can have on your trading performance, and shared all my findings in this article. No matter where you are in your trading journey today, I am confident that you will find this article helpful!
Affiliate Disclosure: We participate in several affiliate programs and may be compensated if you make a purchase using our referral link, at no additional cost to you. You can, however, trust the integrity of our recommendation. Affiliate programs exist even for products that we are not recommending. We only choose to recommend you the products that we actually believe in.
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