How to start copy trading
Do you want to mimic experienced traders' trades from your mobile wherever you go? Then this guide for copy trading beginners is for you.
In this article, we’ll discuss how you can get started with copy trading and how to decide who to copy, as well as some other important factors such as the cost and the minimum amount required to start copying other traders. But first, if you are going to start copy trading you need to decide what markets you want to copy your trades from.
What markets can I start copy trading in?
You can copy trade across all financial markets: forex trading, commodities, cryptocurrencies, index trading and single stock CFDs.
While having a wide range of trading products allows you to profit directly from movements in single markets, it also presents a potentially valuable opportunity for diversification.
For example, if you predominantly trade FX, you could benefit from copying a trader who might be an expert in crypto CFDs or stocks. Watching all the relevant markets all the time is impossible, but copy trading can help fill the gaps.
Whatever market is being traded, it’s important to remember that you remain in full control over your account and that you can place your own manual trades alongside any trades generated by the master trader. You can also adjust your risk preferences at any time, or decide to modify/close existing positions that were placed by the master trader. However, keep in mind that too much manual intervention can defeat the purpose of copy trading and can make it difficult to track the actual performance of the master trade.
If you need to learn more about copy trading before jumping into the app, see our guide on what is copy trading.
How to start copy trading?
As soon as you login into the app, you will be presented with the "Discover" tab where you can browse through the various signal providers.
If you are looking for a specific signal provider and know their username, you can use the "Search" function at the top of the screen.
Otherwise, you can scroll through the providers ranked by their all-time performance or daily performance.
To retrieve the performance stats for a signal provider simply click on their username. Their profile page will open and you will be able to see their past performance - including their monthly return, total return, realised PnL, unrealised PnL and their maximum drawdown.
Scrolling down on the profile page, you will find the markets the signal provider has traded the most (expressed as percentage).
Further down, you will find a description of their service, link to their website and various trade achievements.
Ready to copy? Simply scroll back to the top of the profile page of the signal provider and hit the yellow "Copy" button.
A new page will open displaying the performance fee you will be charged (in this example, there is none). Here, you will also set your preferred trade size (fixed size, mirror master size and mirror master risk) and select whether you wish to copy existing trades or not.
On the next page, you have to agree to the terms.
Once that is done, you will receive a confirmation that you are successfully copying the selected provider.
You can change the settings or stop the copy service at any time by visiting the provider's profile or by going to the "Account" page and then selecting "Who am I copying?".
How can I find good traders to copy?
The Axi Copy Trading app will provide you with some basic performance stats which will help you pick the best traders to copy. Nevertheless, you should be mindful that past performance is no guarantee of future results and even the best strategy can stop working due to changing market conditions.
A key element to picking a signal provider is trust. Reviewing their bio page before agreeing to copy their trades is a smart decision, as their bio showcases information like their trading background, strategy, key metrics like returns and realised P/L, as well as how many people are copying their trades and their most recent performance. See an example of a bio page here.
Tip: Remember that you have control of your money. The funds ARE NOT sent to the signal provider to trade with, you are just agreeing to copy their trades with the trade size of YOUR CHOICE.
Another useful approach is to narrow down the list of traders you are interested in and track their performance for an extended period to fully understand their results against their approach.
For example, their percentage return might not be the best metric to watch, as the trader could have experienced a significant drawdown. Ultimately, the decision about who you copy will come down to your risk appetite and whether you can tolerate a rollercoaster ride or if you would prefer stability. Check out the performance of our signal providers and explore our top traders.
Another benefit is that you can copy multiple signal providers at the same time; investing all your funds in a single provider can be risky, so you might prefer to diversify.
On the Copy Trading app, you will find some useful stats about each signal provider:
- Join Date - Shows when the user started providing signals
- Signals - The number of signals that have been sent out
- Copiers - The number of users currently copying this trader
- Monthly Return - Cumulative performance
- Percentage Return
- Realised PnL - Realised profit/loss expressed in the currency of the master trader
- Unrealised PnL - The profit/loss on open positions
- Max Drawdown
- Number of trades taken in the past 12 months + minimum/maximum number of trades per month
- Markets traded (split by trading instrument)
Key things to watch out for:
- Focus on consistent performance rather than just looking at the highest return – the longer the track record, the better!
- Keep an eye on the max drawdown – this will indicate if the signal provider is trading with high risk or if they are more risk averse
- The 'Unrealised PnL' will help you filter out the traders who close their profitable positions but keep the losing ones running for as long as possible to keep their realised PnL high
- While the number of followers is not in itself an indicator of success, taken alongside a proven track record, it can be a good sign
What is the minimum amount required to copy a trader?
There is no minimum amount of money required to start copy trading. You can start with as little as $100, although you might find that your opportunities will be limited with that amount of capital.
If you do start with a small amount, you might want to narrow down your choice of signal providers to one, as you would otherwise exhaust your margin pretty quickly. Note that some signal providers specify a minimum investment amount to ensure the trades will be going through for the copier.
How much will copy trading cost me?
The Axi Copy Trading platform can be used free of charge, with the benefits of the same ultra-low spreads and lightning-fast execution that are a feature of traditional MT4 trading. Some signal providers will charge a subscription fee for their services, while others might provide it free of charge. This varies from provider to provider.
However, keep in mind that even if a signal provider does not charge you anything, you still have to pay the broker's spread and/or commission (depending on the account type you have).
Can other traders copy me?
Absolutely! You can sign up to be a signal provider so that others can copy your trades. Note that you may have to complete some additional documentation before you can start providing signals and charging copiers.
To learn more, see our guide on how to become a signal provider.
Do I need prior trading experience to engage in copy trading?
One of the most significant benefits of copy trading is that no previous trading experience is required but it’s recommended to learn the basics of trading first.
Once the process of opening an account and connecting it to the copy trading platform is completed, you’ll see why copy trading is so appealing to beginners.
To give yourself a better chance of long-term success, you should make an effort to keep yourself educated in the markets and ensure you understand the risks involved, as well as the different risk parameters that can be adjusted prior to following someone's trades.
Maintain strong knowledge of the markets by visiting the Axi Academy and enrolling in free online trading courses, or see our updated guides at the Axi blog.
Copy trading terminology
There may be some new terminology you have not seen before as a beginner in the copy trading space. We've highlighted the common terms you will see below:
Fixed Size: When you're copying an account, "fixed size" means that you select the total size of the trade you're about to make. So, even though you are copying the signal's position, you are not necessarily copying the size of that position. Instead, you get to set your own.
Mirror Master Size: Mirror master size directly copies the size of the signal that you wish to copy. For example, if the trader you want to copy has bought £50 worth of Bitcoin, choosing "mirror master size" will also buy you £50 worth of Bitcoin. This function copies the signal trade size for all trades, irrespective of your or the master trader's account size.
Mirror Master Risk: When copying a signal, "Mirror master risk" adjusts the size of your trade relative to your account size, so that you take the same percentage of risk as the signal you're copying. To put it another way, buying £5,000 of CAP40 is much riskier for an account with a balance of £5,500 than for one with £100,000!
Max Drawdown: A maximum drawdown (MDD) is also known as a "Hard Stop". This is the maximum observed loss from a peak to a trough of a portfolio before a new peak is attained. Maximum drawdown is an indicator of downside risk over a specified time period. It’s important to note that it only measures the size of the largest loss and does not consider the frequency of these losses. The Max Drawdown is a % value and will apply to your entire account and NOT just a specific signal.
For example, if you were to set a Max Drawdown value of 30% when the equity value of your account falls by 30%, all copying is suspended and all trades that have been sourced from a signal are closed. Note that no new copy trades can be placed on your account until you adjust your Max Drawdown further. In the example above you would need to extend your Drawdown to 40%, for example.
Warning Level: When your drawdown reaches the percentage you input at "warning level", the app will send you a notification to inform you that this level has been reached.
Soft Stop Level: If the drawdown reaches the soft stop level inputted by the user, copying will be suspended.
Hard Stop Level: If the hard stop level is triggered, all trades will close and copying will be suspended.
For any further information, please review our Copy Trading FAQs.
The information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any trading strategy. Readers should seek their own advice. Reproduction or redistribution of this information is not permitted.
