Simon Cotterill Blog | Blindly Copy Trading Will Blow Your Account | Talkmarkets
Technical Analyst, Senior Currency Trader and Director of SC Trading
Contributor's Links: SC Trading Cosen Capital

After successfully running my printing company for over 12 years, I moved into day trading in 2010. From 2014 I have been day trading as my full-time career.

I am a technical analysist with an eye on the news. My analysis centres on pattern recognition and candle stick formations, ... more

Blindly Copy Trading Will Blow Your Account

Date: Wednesday, May 23, 2018 12:53 PM EDT

With copy trade services such as Zulu Trade and Etoro, its become very easy to find a “good” trader, load up an account with £1,000 and set yourself up to automatically copy their trades.  You don’t need to know anything about trading, technical analysis or fundamentals, you can just click a button and follow the leader.  It’s a great idea on the face of it, make money with no effort, other than researching who the best traders are to copy.  You can go and work your 10 hour day, to come home and find extra money in your account, for nothing.

The only thing is, "money for nothing" is not reality in this world.  Consistently profitable traders spend years learning their craft, like any professional.  They understand the mechanics of trading, the discipline and control of emotion that’s required. A professional trader has a master plan, a plan on how to manage risk, a plan on how to handle losses, a plan on how to manage leverage, which is suited to their personality and account size.

Copy trading can work well but every trader has losing trades and losing streaks.  You need to be able to be sure you can handle those losses yourself.  Is your account size big enough to handle the drawdown? Are you able to hold your nerve for the long haul? Are your expectations realistic, looking for maybe 5% per month rather than 30%?

My advice is to educate yourself to at least a small degree before, rather than just blindly following. If you understand the type of trader that your following, you can understand how they trade. If they are a technical analyst you’ll know they are just looking at charts, a fundamental trader will be glued to the news. Knowing how wide their stops are so you know what sort of losses you could expect is a good idea and having an idea of their target and timeframe. Once you understand this you can study the trading statistics and see if they are suited for your personality and risk profile.

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