You can enlarge your trading portfolio Copying a Trader. Copy Trading lets copy the trading activity of another trader. It lets to invest an amount of money of the Balance Account to copying a trader account “proportionally”.
Copy Trading is Really Important. This practice has grown in recent years, giving to any small investor a way to earn money Copying a Trader.
It gives an opportunity, but in the most of the cases, it doesn’t give the result expected.
The Copy Trading is a Great Service and I like it a lot, but it is also very risky.
Copy Trading is a practice to take very carefully.
Copying a Trader you risk to lose a lot of money
The Real Reason why I don’t recommend anymore the Copy Trading Practice is the Lack of Responsible Traders. This doesn’t mean that I don’t want to use it. Indeed, this means to take attention with the choice of who copy and the pros and cons of the copy.
What I recommend to newbie traders is to Invest in your Education and to Study with Dedication. It takes months and hard works but it pays.
In many years of Copy Trading, I have NEVER seen traders profitable for the long-term. Even those traders copied by thousands of people.
Indeed, I have NEVER seen one trader copied leave his copiers in profit in the middle-term and long-term.
I have seen people that were copying a trader who is profitable. But the most of them were not able to Manage their trades with a loss.
The result is that all of them (or almost) have lost everything. Especially the ones which were really able to make a lot of money.
Rule 1 – Cut the Losses Quickly.
If a trader is not able to manage his wrong trades, there is no sense to invest on him. Even if he earns a lot of money.
- The Broker can not Assembly an Elite of Responsible Traders that are Profitable in a proper way. Indeed, it would be a clear violation of the Regulations.
- The Broker could not be able to attract Copyable Traders which are profitable for the long-term. The reasons could be the regulations, the service, and the broker reputation.
- The Regulators seem to consider the Copy Trading as a service that has an Educational Purpose. But, newbie traders see the service like a way to earn money easily. Because of this, the result is that people lose money, blaming the trader copied.
The Service is great and it can really be an impressive resource for anybody wants to try to invest. But the limitations of today, some of them imposed by the Regulators, don’t help the Copy Trading.
“Distorted” and “Overrated” Wisdom of the Crowd
The worst problem is the “Distorted”, “Falsified” and “Overrated” Wisdom of the Crowd. The Spread of Word and Irrelevant Rankings attract people in mass to Copy Traders. Then, they think that copying a trader they are able to earn money without an appropriate Money Management. After an apparent profitability, this makes lose a large amount of money to the Crowd, in a moment.
In general, the consequences are the burning of the Broker Reputation. Besides, even the rising of the general consideration that Copy Trading is not Profitable.
The Crowd is not really wise as it can seem. Indeed, the illusion of easy earnings by what others are doing fascinates the crowd.
The Crowd follows a trend and this doesn’t mean that it takes wise investments in the most of the cases.
The illusions to make money have more power of the good judgment and responsibility. Especially when people are experiency financial problems.
Even having a Margin Risk for Copy Trading, it is extremely arbitrary and the people tends to don’t respect it. This happens when they are losing money. In practice, many people extend the Margin Risk time by time hoping to save their account.
Copy Trading is a service that I have always appreciated and experienced by myself in many ways. I consider it something that can really change the way to make investments. It is like any other service that offers Social Investing and Co-Investing. But people are blind, then they lose money.
I blame the lack of Responsible Traders for copying and the difficult of the crowd to understand who to copy.
Trust me! Be a good trader doesn’t mean that you need a license or to work for a bank. Indeed, they are different things.
The service is good. Who provides the Copy Trading is doing a great work to give the best service ever. The expectations of the crowd by Copy Trading should change in something different and more productive.
Copy Trading is risky and I don’t want to consider it like a service with an Educational Purpose. Indeed, It is a way to invest and it is like to invest in funds.
It is not really able to educate traders to improve themselves properly.
Don’t follow the crowd blindly.
Always look for Responsible Traders and not the ones that seem able to make you rich.
Besides, Invest in your Education.
Anyway, if the trader that you copy is not responsible, he has not a good money management. Then, there is no Margin Risk able to give the certain to save the amount of money invested copying him.