Do you like the idea of making profits using the expertise of professional investors? Then copy trading may benefit you. This strategy allows beginner traders to automate their trading by copying the best and trading without analysing the market.
This comprehensive guide discusses how copy trading works, the best platforms, and the step-by-step procedure to perform Copy Trading in Australia.
1. What Is Copy Trading?
In Australia, you can do copy trading across various financial markets, including FX, Commodities, CFDs on Stocks, and Indices. Some brokers offer both manual and automated copy trading with many features.
2. Who Will Benefit From Copy Trading?
This trading style is ideal for those who need more time to understand the market thoroughly or need to learn to take trades. Anyone can use the expertise of Pro traders to make intelligent trading decisions to maximise their profit potential.
Besides newbies, Copy trading also benefits experienced traders as they learn new and advanced trading strategies from other traders.
Thus, Copy trading is a helpful tool that frees up some of your time and helps to learn about the market and create strategies that suit your needs.
3. Is Copy Trading Legal In Australia?
In Australia, it is legitimate to copy other investors' trades to make money. There are no laws to date that ban copy trading in the country. However, before you engage in this trading style, make sure the broker you choose is regulated and licensed by ASIC.
4. How Does Copy Trade Work?
Copy trading works by researching a profitable trader on a copy trading platform.
Most platforms provide a filter function where one can go through the trading results of expert traders, helping make a decision on which one to follow and what trades to copy. It makes it easier to identify the one that best fits your risk appetite and trading style.
When you find a trader to follow and decide to copy his trading strategy, the platform automatically opens the same trade on your account when he opens a trade.
You can choose the total amount you want to invest in that trade and your total risks per trade. All trades are to one's budget, such as if a copied investor spends 1% of their trading capital, copiers also do so.
5. What Are The Benefits Of Copy Trading?
There are plenty of advantages to copying trading. We have covered a few of them below:
You don't need any prior knowledge and experience in trading.
Watching the trading activity of experienced traders enables newbies to upskill their trading knowledge, familiarise themselves with the financial markets, and learn how to trade.
Social trading networks make it an exciting and accessible route to trading.
You can copy trade on several instruments, including commodities, foreign exchange, and more.
Traders can allocate their portfolios to numerous providers across different assets and various trade strategies to offset losses if one trader fails to perform.
6. Is Copy Trading Too Risky?
Copy trading is inherently risky, and there is always the likelihood of losing money. As a trader relies solely on the expertise and performance of the following traders, choosing an inexperienced trader can lead to losses.
Also, the traders' past performance may give an idea of their future performance. Still, it does not guarantee their success in future trades.
Besides this, there are two other types of risks, such as Market risks and Liquidity risks, that a copy trader should be aware of when entering this trade.
Here Are a Few Suggestions To Make Profitable Copy Trades:
Do thorough research to select the right trader with a long-term track record of successful trades.
Have proper risk management measures like Stop Loss that automatically exit the trade and curtail your losses
Invest only so much you can afford to lose.
New traders who are anxious about losing money with copy trading should try it with a demo account before trading with real money.
7. How To Start Copy Trading Step by Step?
Anyone can start Copy Trading by opening an account with a copy trading provider, picking a trader, and clicking "follow". Here are the simple steps to help you get started as soon as possible.
Step 1: Understand The Copy Trading Terms
Though Copy trading does not require prior trading knowledge, it is good to familiarise yourself with trading terminologies before you start. The trading knowledge will also help in researching the best trader to follow.
So, here are a few Copy Trading terms you should know:
Step 2: Open A Trading Account
The next step after gaining trading knowledge is to open a live account with a copy trading provider. All you have to do is to complete the registration form and deposit the initial deposit.
Most trading platforms offer three types of copy trading functionality – manual, automated, and semi-automated to traders. Traders can access a broad array of markets for copy trading, such as cryptocurrencies, stock indices, Forex, and commodities.
Step 3: Choose A Trader
After your trading account is approved and active, it is time to search for and find profitable traders. It is the only effort that traders need to put in throughout the trade. Most copy trading platforms provide a filter that applies trading metrics to narrow the search for successful traders.
The feature screens traders based on the following aspects:
The total profit of each trader
The total AUM
The type of trades they take (short-term or long-term trades)
The traded markets
Their winning percentage
The number of followers
The risk level of their strategies
The total amount of funds they manage
Their return on investment
Frequency of trading
In addition to the above, you must also shortlist traders that best match your trading objectives. Choose multiple traders (instead of one) with a decent amount of trading activity, a reliable return rate, and various followers.
It can help you improve your possibilities of success by copying. Once you have found the right trader, hit the "follow" button to copy his trades.
Step 4: Decide Your Investment Amount
After deciding on the trader to follow, you must decide how much money you wish to allocate to each trader if you have chosen more than one person to copy. Be balanced and keep your portfolio diversified.
Do not put all your money in a single trader. It will help you manage your trading risks. Note that you will need a separate account per trader you decide to follow.
The copy trading platform will automatically replicate your trading account's chosen traders' positions. Based on the trader's performance, you can invest more funds into the trade and vice versa.
Step 5: Choose Your Trading Parameters
With adequate funds in your trading account, you can start copy trading on eToro or other popular trading platforms. The platform will ask you to select parameters such as order amount, desired leverage, and a derivative trading pair.
Confirm your decision and click on Copy to follow the trader's moves.
Step 6: Monitor Your Trades
You must regularly log in to your trading account to see your existing trade positions and even close them manually at any time.
8. Which Broker Is Best For Copy Trading In Australia?
Each Copy trading platform uses different copy trading features. These include the minimum amount to copy trade, risk management features, and how to deposit money between the copy trading accounts.
Some platforms enable traders to place "Stop Loss orders" on the copy trading relationship to manage the risk of their copy trading activity. As copy trading is allowed across a range of financial products, it is beneficial to identify the ones you are interested in copy trading.
Here are our top picks you could consider:
eToro (Our Recommendation)
Extensive base of traders from more than 140 countries
2,000+ financial instruments
Commission-free copy trading
Low minimum deposit
AvaTrade Copy Trading
Allows traders to copy trade CFD, cryptocurrency, and forex products
Offers 3 top copy trading options as AvaSocial, DupliTrade, and Capitalise.ai to allow traders to take advantage of market volatility
Complements its patented copy trading solution
ASIC and six other different regulators across different continents regulate this broker.
Allows retail investors to choose from 3rd-party services such as MetaTrader signals, MyFxBook, and DupliTrade
Allow copy trade forex and CFD products.
SCB regulated broker
Provides access to powerful tools such as MT4, MT5, cTrader, or Trading View via phone, tablet, and laptop
9. Comparison Of Brokers For Copy Trading In Australia
|Broker Name||Price per trade||Inactivity Fee||Markets Served||International|
eToro copy trading (global stocks)
US$10 per month if there’s been no log in for 12 months
IG Share Trading
ASX shares, US shares, UK shares, ETFs, and more
|CMC Markets Invest||$0||No||ASX shares, Global shares, mFunds, ETFs||Yes|
|Tiger Brokers||$6.49||ASX shares, Global shares, Options trading, US shares, ETFs||Yes|
|Monex Share Trading||$19.95||No||ASX shares, Global shares, US shares, ETFs||Yes|
|Selfwealth (Basic account)||$9.50||No||ASX shares, US shares||Yes|
|Moomoo Share Trading||$8.80||No||ASX shares, US shares, ETFs||
Bell Direct Share Trading
ASX shares, mFunds, ETFs
|Superhero share trading||$5||No||ASX shares, US shares, ETFs||Yes|
|Saxo Capital Markets (Classic account)||$5||No||ASX shares, Global shares, ETFs||Yes|
10. Frequently Asked Questions (FAQs)
What is Crypto Copy Trading?
Many believe that making money in cryptocurrency is a complex process that needs extensive knowledge of finance, mathematics, and technology. However, the help of several tools like Crypto copy trading makes it much easier and simpler to trade crypto.
Crypto copy trading is among the most active investments allowing crypto traders to copy the trades of expert cryptocurrency investors, automating the entire crypto trading process.
Let us look at this example to understand what crypto copy trading is. Suppose a trader you follow spends 5% of their money on a coin. In that case, the copy trader's software will also execute the same trade with the amount of capital you wish to invest in the same coin. Thus, the automated software looks at what the followed trader is doing and replicates the same.
Today, several cryptocurrency exchanges offer the copy trading option to assist newbies benefiting from professionals who have a greater chance of entering profitable trades. Novice traders can access the professional's trades, statistics, strategies, and records, copying the trading in real-time.
How Can I Find Good Traders To Copy?
The idea of making triple-digit yearly returns by copying the trades of other traders may be tempting. It takes a lot of thought processes and research to find the right trader you need to follow to reap the benefits of this strategy.
You should track the past performance of traders when making the selection. Look for active traders with at least 1-year trading history, a return of between 10% and 30%, and place at least one trade per week.
It shows that traders are working on growing their trading base and parking their money in different trades rather than locking all of it in one trade. You may even consider spreading your copy trading between 2 to 4 traders to mitigate trading risks.
How To Choose The Right Copy Trading Provider?
With so many options available, finding the best provider is no less than a challenge. We have listed a few things you should consider when selecting the most suitable copy trading provider.
Should have a minimum 12-month verified track record
Should provide steady returns
Should have a low-risk profile
Should have a maximum historical drawdown of 30%
Should use stop loss on all orders
Invest no more than 30% of your investment with a single copy trader provider. The way to allocate your trading capital is to diversify across various copy trading providers. It will help reduce the chance of losing money from careless trading behaviour.
Is Copy Trading Safe And Profitable?
There are several cases where Copy Trading works well. Based on the estimation of Industry experts, copy traders who copy an expert trader make an average return of 30% on their investment.
If you follow professional traders with several years of trading experience and who have mastered trading and risk management skills, copy trading can be safe and profitable.
Moreover, copying trades on leverage can magnify your profits. So, you can profit from the market without a personal trading strategy.
How Much Does It Cost To Start Copy Trading?
Different brokers require a minimum deposit to start copy trading.
eToro requires at least $50 to copy a trader on the platform.
Forextime allows traders to copy trades from as little as $100.
In the case of AXI, the minimum funding amount suggested for copy trading is $250.
How Much Does Copy Trading Cost Me?
A lot of traders want to know - Is copy trading free?
There are usually no special fees to use the copy trading function. However, traders must pay the following service charges such as:
A percentage of the profit you make to the Strategy Manager
Spreads on the trading
Transaction fees for trades
Can I Make Money Copy Trading?
Yes. Copy Trading is one of the most popular ways to make money without putting much effort into analysing the markets and implementing the best trading strategies.
All you need to do is to follow the best traders who trade your preferred markets and align with your trading style and goals. You can make decent gains. The profits you make from this trading style depend on the performance of the traders you follow.
In addition to choosing the right traders, you also need to have proper risk management strategies in price to maintain your gains. It is a good practice to monitor your copied trades and make necessary adjustments when market conditions change.
Many copy trading platforms permit users to set a maximum loss or assign a certain percentage of their trading account to a single trader. Furthermore, social trading and semi-automated copy trading help you manage your risks effectively.
Is Copy Trading Good For Beginners?
Copy trading is ideal for beginners who need more trading experience or the time to trade profitably. It enables inexperienced traders to follow some of the most successful traders on the market and learn best trading practices along the way.
Is Copy Trading Profitable?
Copy trading is an easy and quick tool to make money by investing in trading ideas and the expertise of other traders. All it takes is to open a live account and choose a profitable trader, and you are ready to go.
What Is The Best Copy Trading Platform For Crypto?
eToro is one of the most popularly used platforms to do copy trading. Its the first platform to initiate the concept of copy trading in 2010. Currently, it offers a range of social features like an FB-style newsfeed that enables you to engage with other traders directly.
What Is Copy Trading In eToro?
eToro is one of the best brokers that provide copy trading features to view and mirror trades executed by veteran investors. The process is easy - select a trader you wish to copy and then do a few settings in your account to follow their trading moves.
With just USD200, you can repeat trades from top-performing crypto traders on this platform. The best part is that you don't need to pay extra fees/ charges to use this service.
In addition to copy trading, eToro also gives you a comprehensive social experience, where traders can speculate on prices, discuss their moves, and share important news.
The largest social trading platform
Presence in 140 different countries
Minimum Deposit: US$50
Deposit Fees: Variable (conversion fees for non-USD deposits)
Withdrawal Fees: US$5 (minimum withdrawal of US$50)
Trading Fees: Variable Overnight and weekend fees apply
Deposit Methods Allowed: Bank transfer, Debit card, Neteller, PayPal, Online banking, Skrill
Offers an insurance fund
What Is Copy Trading In Forex?
Copy trading in forex implies that a trader can copy another trader's positions without scanning the dynamic forex markets. MT4 or MT4 VPS are the two commonly used trading platforms for social trading.
FXTM offers the industry's leading FX trading platform MT4 on PC, MAC, tablet, and mobile to trade anywhere and anytime you like. The cutting-edge technology of MetaTrader with FXTM's unmatched trading services provides a superior-quality experience for the user.
A few other Copy Trading Forex Brokers in Australia are:
What Is Copy trading In OctaFX?
OctaFX is a top-rated global broker with 7 million trading accounts to date. The platform has been providing top-notch trading services since 2011.
OctaFX's "Copytrading service" allows traders/'Copiers' to copy trades from other traders. To activate this service, traders must select the 'Start Copying' option in their account dashboard.
You can begin copy trading in 3 simple steps:
Create an account on OctaFX (You can access the OctaFX Copy trading app or desktop version)
Sign up and fund your wallet via any of the available payment methods
Find Master Traders (the best traders) you want to follow. Use their Risk-Score feature to evaluate Master Traders based on how risky their trading strategy is.
Click 'Copy'. Whenever a Master Trader opens an order, the same order gets replicated on the Copier's trading account. This way, a Copier can trust the Master trader's expertise to make money effortlessly.
Track the trade and profit
OctaFX charges a service fee from the client for providing copy Trading services. This fee is applied to withdraw and deposit funds, open or close a trade, or hold trades overnight.
Copy trading can be a simple and effective way to boost your profitability and trading skills with zero effort.
Copying experienced traders enables novice investors to automate their trades and learn more about how the market works. By carefully researching traders and following reputable ones, you can increase your chances of success in the online trading market.
Useful Links to Explore: