What is mirror trading? Can you make real money with it? And why do some people say that mirror trading is a scam or a pyramid scheme when it is not?
Mirror trading is legit, and it is not another pyramid scheme. It involves “mirroring” the trades of a successful trader. You can either mirror the trades outright or use an automated system that uses a trading strategy based on the successful trader’s trades.
In this article, you will learn what mirror trading is and how it can help you make money while trading in the stock or forex markets. You will also learn about some misconceptions and myths regarding mirror trading and the difference between mirror trading and other trading types. Lastly, you will learn how to do mirror trading properly.
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 trading strategy that involves copying a successful trader’s trades. There is a slight difference between mirror trading and copy trading, which we will discuss later on.
Using the successful trader’s trades, you can build an automated program that applies certain rules and principles to the market. You can then use the automated program to place trades automatically, based on the trading strategy that someone developed.
An experienced trader might develop this trading strategy, or it might be modeled after an experienced trader who has seen a lot of success in the forex or stock market. There are several advantages to mirror trading, though everything has its pros and cons.
You can also use mirror trading to copy a trader’s trades directly. Since trading information is often available online, you can use a digital platform to automatically “mirror” and copy the successful trader’s trades in real-time.
The thinking here is that, as a newbie, you can’t know the right moves to make, and copying a successful trader will help you earn money. Some people refer to this strategy as copy trading, but people use the two different terms interchangeably.
Watch this video for more information on what mirror trading is:
Is Mirror Trading a Pyramid Scheme?
Mirror trading is not a pyramid scheme. Instead, it is a real, legit strategy that you can use to trade in any market. The confusion comes from certain companies promoting mirror trading. Not all companies are legit, but the strategy itself is solid and as legit as it gets.
Where Can You Use Mirror Trading?
Traders use mirror trading very often in the forex market. In the forex market, you are trading currency pairs. For example, you might be trading the EUR/USD. Because you are often using leverage, you must get your strategy right. If you are a newbie, modeling a successful strategy can help you earn money.
However, you can use mirror trading in any market. Many people use mirror trading in the stock market. If you are trading cryptocurrencies, you can use mirror trading as well. Mirror trading was first made available to institutional investors, but it is now available to all investors and traders through digital platforms.
Mirror Trading vs. Copy Trading: What’s the Difference?
As we mentioned before, people often use the two terms interchangeably. However, mirror trading can also refer to using an automated trading system based on the successful trader’s trades.
For example, you might use markers and algorithms to copy the successful trader’s strategies. You are not copying each trade they are making but using an automated system with a strategy based on their trades.
Mirror trading can also refer to a system that automatically copies their trades in real-time. In this instance, you are copying their trades. For example, if they trade A for B, you also trade A for B. If they sell B, you also sell B. Some people will refer to this as copy trading instead of mirror trading, but others will use the terms interchangeably.
Others will say that copycat trading is another term you should use if you don’t use an automated system instead of manually.
What Is Mirror Trading International?
You may have read that “Mirror Trading International” is a scam. However, Mirror Trading International has nothing to do with mirror trading. It is a business that decided to use the name “mirror trading”.
The actual strategy of mirror trading has been around long before Mirror Trading International. Mirror Trading International focuses on the crypto market, and it does not represent mirror trading.
As we said before, every trading strategy has its pros and cons. So, what are the pros and cons of mirror trading?
Pros of Mirror Trading
Listed below are the primary advantages of mirror trading –
- It’s great for newbies. One of the challenges newbies in any trading market face is getting their trades right. There is the potential to lose a lot of money due to just one wrong step. By mirroring the strategy or trades of a successful trader, you can avoid those wrong steps.
- You don’t need any experience. Mirror trading is a trading strategy that lets you get started without any prior experience.
- There is no learning curve. You also don’t have to deal with a learning curve before you can succeed. Most trading strategies that are good require you to gain experience and go through a learning curve until you get good at it. The problem is that during this learning curve, there is the potential to lose all the money you invested.
- It doesn’t cost a lot of money. As long as you get a good program, it shouldn’t cost you too much money. The reasoning for this is that you can invest less money upfront and slowly build yourself up. After all, you will be trading with a tried and tested trading strategy that will very likely earn you money.
- You can leave your emotions out. A good trader never listens to his emotions while trading. However, as a beginner trader, it can be too easy to follow emotions of greed or fear of loss instead of the trading strategy you are supposed to be following. Since mirror trading is automatic and not manual, you don’t have to worry about this.
Cons of Mirror Trading
Listed below are the primary disadvantages of mirror trading –
- You need to choose the right trader. It is important to choose the right trader or trading strategy to mirror. If you choose the wrong one, you can lose money. However, a good program will not let you down.
- Your style can change. Everyone has a trading style that they like. You might learn, over time, that your trading style differs from the one that the trader you are mirroring uses. In that case, you might have to start mirroring a new trader.
- You need to account for time delays. If you are copying a trader’s trades outright, it is important to choose a program that copies the trades right away. If you are trading in the cryptocurrency or forex market in times of market volatility, a slight delay can make your mirror trading strategy worthless. That is why it is important to copy the trades in real-time.
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 worth it. The pros outweigh the cons in this case. Mirror trading is a great way to start earning money fast, even if you are a newbie trader who does not have a lot of money to invest upfront.
We recommend that beginner traders, and even not-so-beginner traders who have not seen success, try mirror trading to increase their chances of success. It is a great strategy if you choose the right system.
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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