How To Choose A Master Trader To Copy?

Copy trading is an amazing way to trade in the forex market without having extensive knowledge about the market. When you engage in copy trading, you copy the trading strategy of a master trader who has allowed other traders to copy his/her trades. For example, if the master trader opens a trade with X capital and Y leverage, and follows a specific strategy, the copy trader’s account will automatically also follow the same strategy. However, the most important part of being successful in copy trading is to choose the right master trader to copy trades from – which we will further in this article.

How To Select A Master Trader?

One of the biggest challenges for copy traders is to select the right trader to copy. A copy trading platform supports hundreds of traders who choose to open their account’s strategies to be copied. It is often hard to find out traders that are real and are not. Below are a few tips to choose a master trader to copy from – 

  1. The first step is to check the statistics of the master trader. The statistics of a master trader will display the average risk-reward ratio of the master trader, their history of commissions and orders, profit and loss percentage, and other necessary data to show the value of the trader. 
  1. The next step is to see for how long the master trader has opened his account to copying. A trader should choose a master trader who has a history of more than 12 months. This is because the longer the history, the clearer it will show how experienced they are. 
  1. Notice the maximum drawdown level. A copy trader should link his/her account to a master trader who has an account capital almost the same as the former, or the copy trader must have the potential to fill his account to the level of capital of the latter. Both should have the same risk appetite.
  2. Consider the number of followers copying the master trader. Similar to social media, if a master trader’s strategy is popular and profitable, it will attract more clients/copy traders. Hence, the more the number of copy traders following the master trader, it is equivalent to his success rate. However, be sure to check whether a greater majority of the accounts are live, real accounts and not demo accounts. 

How To Copy From A Master Trader?

If you research among broker platforms that offer copy trading services, you will notice that each broker has its own set of tools and guides to link your account to that of the master trader’s account. Basically, once you have selected the master trader to choose from, you can start copying the trader by filling the information required.

Copy Trading is one of the easiest methods to make money in the forex trading world. However, copy trading contains risks as well. If the master trader loses a trade, the same happens with the copy trader’s account. However, if they lose a trade, they still get paid. But it’s not the same for copy traders. So, weigh the pros and cons of copy trading before going ahead with this.