I am sure if you have taken a look at trading forex you have come across something called mirror trading which basically means you copy trades from other traders into your account. Opinions may differ and I read quite a few threads by new traders who seem to really think it is a good approach. While each traders needs to decide this for them it is my opinion that mirror trading should be avoided as in the long run it will not succeed.
As a trader nothing will substitute your own ability to analyze trades and have your own strategy. You need to be independent and operate your own account. This will take time, money, patience and effort but trading was never about making a quick buck. This is just my opinion on this topic, but I wanted to point it out as new traders should think carefully before jumping into this long-term trap.
I do agree with you that if a new trader’s goals are reaching consistency in a long term and trading for a living, than mirror trading is not the best way.
This is what happens on etoro.
The thing is, say trader A buys a trade. Others see this and copy so the price rises. Trader A then gets out with a profit as his trade has been self fulfilling due to copiers pushing the price up.
The copiers dont get such a good deal, as they were later getting into and out of the trade.
Personally, I think mirror trading basically is useful when you’re just trying to learn Forex. It’s the best way I guess to trade and at the same time learn how everything works. Profit would depend on the trader that you copy. But eventually, you will have ways on your own as you grow, thus, leaving this.
Mirror trading helps you to mimick the trade of other traders. The advantages of mirror trading are quite numerous but the trader must be careful because since the markets is always changing it also has its disadvantages. And not all broker offer this service.
In mirror trading trades are made whether the computer is on or off that’s it is important the trader is comfortable with the strategy that is selected.
Whilst I would agree in the long run mirror trading is not as effective as solo trading, I used it to learn different strategies and made a decent profit.
Just wanted to put my own 5 pence in. I think, for a new comer to Forex, mirror trading is extremely risky and must be avoided until you have a proper understanding of the markets. However I have been trading for a few years now and continue to see results from using two mirror trading programs (Mirror Trader & Zulutrader).
I will reiterate: the key is to be able to trade for yourself first and know how the markets work. You then need to approach the mirror trading with the same mindset. Dont automatically invest in the trader with simply the highest profit. What is their win ratio, max draw down, average pips per trade, are they fiddling their numbers by leaving loosing trades open, etc. Essentially, as in trading Forex, you need to be able to come up with your own working strategy on how to choose traders.
These are just my own personal thoughts - feel free to agree or disagree.
Absolutely true. There is a strategy for picking safe but profitable fund manager to deal with your money, but I prefer to be on top of the trading myself. Passive income doesn’t really depend on you, but providing that you know how to trade yourself you will always be in profit.
No one mentioned money management. As anyone who has been trading more than a month knows, trading method is only one part of a successful trading strategy. If you’re mirror trading patience and discipline comes with time, same as trading yourself. But I would think you would need a very conservative money management plan if you were mirror trading.
I agree with everyone else if you want to be a full time trader long term, you have to learn to do it yourself. When you learn how to trade your own account, you can quickly access what’s good info and which is BS. But having said that, you also must keep an open mind when exploring something new or different. There still is no short cut to success, but there are a lot more tools today to help a trader along the way, than say 20 years ago. Anyway my 2 cents
Gp
Agreed, its no substitute for the real thing…the only pro I see in mirror trading is that it allows newbies to make some money. The downside, most newbies then move on to signing praises about copy trading and forget that the real one is not just the better option but the only sane one left on the board…
There’s no such thing as a free lunch, indefinitely…
Simple, the portal uses multiple metrics to sort through various traders, and lists them by the stats…based on which, the lay trader makes his call on whom to trade with. The whole process is automated, and yes, trade info is private…
Mirror trading is profitable and seems an easy way trading by coping other trading strategy but at times this strategy may not turn out profitable as you might think and can also make lose money.
I am considering mirror trading at the moment. I have been following a trader who sets a conservative monthly target of around 300 - 350 pips. He holds a weekly trading room, daily trading room with second sessions twice a week. He explains his strategy, where he sees the market going, the importance of money management and answers any questions. He is free to offer advice throughout the European and New York sessions. In this case you are getting more than simply a mirror service.
Following a trader is basically not trading but only want to increase money without headaches.
We don’t know the trading plan, strategy, risk management, etc.
Consider also that the capital condition of the followers of course is not the same as the trader.
The biggest part missing in this field is the psychology exercises.
It is an absurd way to learn and teach a trader trading by mirroring or following others. I have been there doing that and that.
And that’s the million dollar question…you cannot. There’s no way for say a trader mirroring or copying another trader’s trade, to ensure that they rake in the pips. Of course, one way to get around this is to automate the process entirely so that each time the other trader makes a trade, you do as well. The downside, if that trader decides to blow out his account on an insane move, so will you…but that happens rarely, as you set in all the parameters, your risk and the rest…
Again, the safe way to trade is to trade manually and on your own. You can start off with doing the copy trade option to start off with, but would seriously suggest that you make the transition to manual trading asap…good luck.
Looked at eToro to resolve a dispute and that is exactly what their best traders do. They average down their losers and when it goes back in the correct direction they close for a profit and eToro books the stats.
BUT BUT BUT … if you look closer they are holding huge losses, far beyond any gains in those trades “that have fallen and can’t get up”.
The stat’s they show for the best traders are only the closed trades not their current NAV.
If you want to mirror trade then the best way by far is to buy an ETF in the S&P and walk away for 20 years. You just mirror traded the stock market.
Either you trade or you don’t, if you are not doing it then put your hard earned money in a more trusted and secure place than a guy on the internet with a skype show.
