Copy trading has exploded in popularity over recent years as more forex platforms add it to their toolkits.
The appeal of copying other more experienced forex traders is obvious, and you may wonder whether copy trading is the best and most efficient way to trade forex.
The short answer we will give you is “probably not.” But copy trading is still useful. In this post, we will give you a longer answer, going over the pros and cons of copy trading and how you can decide whether it is best for you.
Reasons Why Copy Trading May Be the Best Way to Trade Forex
First, let’s go over the arguments for why copy trading could be the best way to trade forex.
1. The easiest way to trade forex
Undoubtedly, there is no other approach to forex trading that requires less effort than copy trading. All you need to do is select traders to copy, input some basic rules like your trade amounts, and then let the platform place your trades automatically. That’s all.
2. The least time-consuming way to trade forex
With copy trading, you do not have to spend countless hours researching, testing strategies, searching for setups, and analyzing and troubleshooting your trading.
Ideally, you should take your time deciding which traders to copy. But even if you do that, it will not take you very long. And if you do not care all that much, you could get started in mere minutes.
3. A flexible way to trade forex
Copy trading gives you the ability to place trades during any time of day or night. You can trade while you are at home, on the go, at work, or doing anything in any location.
If you were trading manually, you would not necessarily have that freedom. You would need to trade only when you are physically available to do so.
Reasons Why Copy Trading May Not Be the Best Way to Trade Forex
Okay, now you have some strong reasons why copy trading may be the best way to trade forex. But there are also some solid rebuttals. Let’s talk about the reasons why copy trading may not be the ideal approach.
1. You give up the most control with copy trading
The only control you have with copy trading is which traders you are going to copy, how long you will copy them for, and what you will risk on your trades.
Beyond that, you are just taking everything on faith. You do not control the strategies or the setups. If something goes wrong, all you can do is stop copying that trader. You do not have the power to troubleshoot their problems and make them (and yourself) profitable again.
Some traders may be okay with that trade-off. But when you give up control, remember, you also sacrifice your own power for convenience. That is a pretty big limitation.
2. You learn the least with copy trading
Another of the reasons why copy trading is arguably one of the worst ways to trade is that you do not learn a lot from it. You might learn a little, but only what you can glean by watching the trades that are executed in your account.
You will not have access to the trader’s full strategy and rules as you are copying. You will not be able to effectively replicate it on your own as a result. And you will not be practicing creating strategies, improving them, troubleshooting them, or managing your emotions around tough decisions.
As a result, you will not improve as a forex trader yourself. You will just rely on other people.
3. People don’t successfully trade forex for a living by copy trading
Finally, have you ever met someone who has spent years successfully earning a living simply by clicking the “copy” button in their forex accounts? Probably not.
If you are serious about trading for a living, you are going to need to learn how to trade yourself at some point. You cannot copy traders forever and expect to make it, at least not for long.
The Bottom Line: You Need to Decide if Copy Trading is Best for You
Ultimately, whether copy trading is the “best” approach to trading forex or not comes down to your priorities and goals.
If your goals are to save time and effort, get right to trading, and keep things flexible and simple, then yes, copy trading may be one of the best ways for you to trade forex.
But if your goal is to become a profitable full-time forex trader over the long term, then copy trading is only one tool in your trading toolbox. The best way for you to trade will be using your own strategies so that you can maximize control and learning to become the best trader you can be.
