Is it okay to do mirror trading, or will you get in trouble? Is mirror trading illegal, or can you make a perfectly legal and kosher profit with this strategy? What is mirror trading, anyway?
Mirror trading is not illegal. You can make money with mirror trading, even without any experience. Mirror trading refers to automatic trading based on algorithmic strategies based on real traders who have used them to succeed while trading forex and other securities.
Now, we’ll explain in more detail what mirror trading is and whether or not it’s illegal. We’ll also clear up some confusion about mirror trading in general and one specific company in particular. Let’s get into it.
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
What Is Mirror Trading?
Mirror trading is a type of securities trading strategy that aims to achieve two goals:
- Allow people to earn money without having a lot of trading experience
- Earn money while trading even without much time investment
It accomplishes both of these goals by using an automated system to place trades based on indicators and algorithmic strategies. These strategies are created based on successful traders who have used such techniques to be successful. This type of mirror trading allows you to pick the best of each trader’s strategy.
However, mirror trading can also refer to when you’re emulating the strategies of a specific trader. For example, you can build an automated method based on their trades in the past. But such a strategy might not be as refined or successful as one that takes many traders’ actions into account.
Mirror Trading vs. Copy Trading
Mirror trading and copy trading are often used interchangeably, but they’re not the same thing. Mirror trading refers to when you create a trading strategy based on algorithms surrounding a successful trader’s trades. A plugin or a trading platform usually creates this strategy for you. All you have to do is invest money, and the account will do the work for you.
Copy trading, on the other hand, is more refined and specific. With copy trading, you’re usually copying the trades of a specific trader, trade for trade. For example, when they buy the USD/EUR currency pair at a certain price point, you’ll automatically do the same. Like mirror trading, copy trading is hands-off and automatic, and you don’t have to place any trades manually.
However, you’re copying a specific person. It’s more specific than mirror trading, where you’re using an algorithm based on someone’s or a few people’s trades. Both of them give you the chance to be more successful, but mirror trading will appeal to some because you’re not relying on one specific person. Everyone can make an error here or there, while an algorithmic trading strategy is less susceptible to error, especially the ones driven by human emotions.
That’s because even successful traders can fall victim to emotional trading based on greed or a fear of loss instead of a true financial strategy. However, an algorithm won’t make that mistake. On the other hand, an algorithm can’t always make trades based on real-life realities, such as breaking news that can affect a currency pair’s future, while a trader can.
This Youtube video is very short, but it does a good job of explaining what mirror trading is:
Is Mirror Trading Legal or Illegal?
There are no real laws prohibiting mirror trading. Of course, nothing we say constitutes legal advice, and you should always research the laws in your country and take responsibility for your actions (this is a standard disclaimer). There’s no reason to assume mirror trading will be made illegal any time soon.
However, mirror trading isn’t always permitted.
That’s because some countries might have some forex and crypto trading restrictions in general, which don’t have anything to do with mirror trading specifically but can affect mirror trading in a roundabout way.
There’s also been some confusion about Mirror Trading International and various court actions taken against them. However, Mirror Trading International is a company that decided to include the words “mirror trading” in their name. They aren’t the same thing. Many news articles talking about “mirror trading,” especially news articles that have been published recently, aren’t talking about mirror trading at all but rather the company.
Use a broker or trading platform regulated in your country. You can’t use a broker or trading platform that isn’t regulated and doesn’t follow the laws. However, that is true in all types of trading, not only mirror trading. You should always use a regulated broker to keep your money safe.
Is Mirror Trading Haram in Islam?
Trading is not haram, and neither is mirror trading. Trading can be haram if you don’t meet certain rules. For example, trades must be made instantly — which is normal in forex — and shouldn’t have any interest. You can click here to learn more about Islamic trading, but know that some platforms have Islamic accounts.
Is Mirror Trading Profitable?
Mirror trading can be very profitable, even if you don’t have past experience with trading, since the platform will make the trades for you. The time of year matters quite a bit since the securities rates are always subject to change. You might make a bigger profit investing at one time rather than another. Holding your money a little bit longer can result in much bigger gains.
Another reason mirror trading works is because you don’t have to worry about making emotional trades. When you place trades yourself, you’re susceptible to making errors based on your emotional state. For example, if you just lost a lot of money, you might be afraid that you’ll lose even more money and sell your assets in a panic, even if that is logically the wrong move, and it would be better to hold your assets.
However, mirror trading does everything for you automatically because the trades use algorithmic strategies that are based on successful trades in the past. For example, a successful trader might use various indicators to decide whether to buy or sell a currency pair. More often than not, these indicators are true. So, you can invest money and let the platform do all the work for you without worrying about making the wrong trades.
Can Anyone Make Money With Mirror Trading?
Anyone can make money with mirror trading and it doesn’t require a lot of money, time, or experience to make money with mirror trading. Even if you only have a small sum of money to invest, you can still make money with mirror trading, especially as the months and years go by and your account grows. Mirror trading is excellent for people who don’t have time to learn how to trade or watch the markets.
Much like all financial exchanges, mirror trading isn’t bulletproof. It requires a lot of time researching which traders are worth mirroring or which companies you should trust to get the job done for you. That being said, many beginners find it easier to make money through mirror trading rather than trying it without any external assistance.
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
Mirror trading is generally legal. However, it’s important to be aware of any laws that are applicable in your area. You also have to make sure you’re using a regulated broker and following your area’s laws. It’s also worth mentioning that it can be very risky if you don’t mirror the right traders. Fortunately, mirror trading doesn’t take much experience for most people.
While Mirror Trading International has faced legal troubles, they’re not the face of mirror trading. You can safely, legally mirror trade without using this company.
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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