Entering the world of forex trading is both easy and hard. It is easy in the way that anyone can become a forex trader. There are no college degrees needed, no extra special training required, and no licensing requirements. But it is also hard in that your purpose for trading is to earn profits but it is something that can be hard to achieve especially if you’re quite new to forex trading and still learning the ropes. More often than not the average new forex trader will incur losses during his first few months of trading. While losses are a recognized risk when trading, losing all of your investment is a painful experience and can discourage the most ardent of traders.
One of the best ways to minimize losses when starting out in currency trading is to go into copy trading. In this type of trading, the new trader can get to copy the trades of other more experience traders. Copy trading has many advantages. Among them are:
- It allows a new trader to trade with the same level of efficiency as a veteran trader. It takes a lot of time for a new trader to learn all of the intricacies and technicalities of trading. Copying the trades of an experience trader allows him to trade just like a veteran.
- Copy trading or mirror trading is a simple process. In fact, many trading platforms have made it easy for the trader to do it by enabling this option in just a few steps. No complicated steps are needed to activate it. After the process has been setup, all one has to do is to select a trader that will be followed and the trading platform will do the rest.
- There is no immediate cash out to try copy trading. There are options open that will allow for a trader to be followed for free on a trial basis. Only when the new trader has been satisfied with what he is seeing and in the results can he decide to shell out money and pay for the trading signals.
- Aside from the previously mentioned advantage of being able to trade like a veteran trader and profiting at the same level as a veteran, the risk to the new trader remains relatively minimal. The reason for this is that the trading volumes are set based on the amount of money that is in the account of the trader. There is no chance that the new trader will get wiped out following the same volumes of the veteran trader.
- Finally, using copy trading shortens the amount of time a trader goes from novice to experienced. The constant interaction with other traders, studying trading patterns and mirroring their moves and strategies allows the new trader to learn a lot about currency trading because he is learning from experience. Some people have quite accurately called it a form of social trading.
Copy trading allows the new trader to learn by example, and this is probably the biggest advantage of this form of trading.
Mario Singh operates Askmariosingh.com, a site that provides forex forecast for traders.