In the last few years number of traders have emerged who have introduced concept of copy trading. It is also known as social forex trading. The idea of copy forex trading is very simple in which experienced and best forex brokers share their trades with community of traders.
The best thing is that the traders are free to copy their trading strategies. Actually, it is a novel idea in which experienced traders helps novice traders to learn from forex market wizards.
Now let us start with the things of forex copy broker before initiating copy trading.
Many social forex brokers allow traders to search for the traders to copy based on risk level, profit and number of other traders copying from forex trading expert. Now, this makes the procedure of finding popular forex copy broker easier to find, but apart from this also there are few things which have to be considered by the brokers before they start forex copy trading. They are:
- One must not copy a trader just only for high returns
Just like the popularity of a trader, trading result of that trader might be misleading too. There are a number of traders those are having a stat of 300% regarding profit, but a sound forex copy broker is required to reconsider number of trades and total amount which has been invested to earn that much profit.
- One must not be influenced by the popularity of any trader
It is true that being popular doesn’t mean that the trader is best. Forex copy brokers should see that how many peoples are copying a forex expert. It might also happen that an unusual trader makes big profit just with a single trade. So it is important to go through trading reports of maximum number of expert forex traders.
- One must always check the risk profile
It is the most important responsibility of any given forex copy broker to offer some measurements to check the risk profile associated with the expert trader. It is also true that the strategies used by most of the big traders might not suit for the common traders and ultimately they will incur loss. So it is very crucial to check the risk profile of the trader before start copy trading.
- Try to differentiate
Every forex copy broker cannot risk the account of his trader just by copying a single trader. Rather the broker must differentiate among different expert traders and split the money among them. Doing this will result in minimizing the risk factor because at that time only a portion of the account will be in peril if the broker engages in risky trades.
It is worth mentioning that if the above-mentioned points are kept in mind by every forex copy trader, then they will be able to bring more and more profit to their clients. Also, the traders will also be able to minimize the threat level associated with each of the trades.