Copy Vs Mirror Trading: Which One’s For You

Online trading has become quite popular recently. However, everyone who’d want to trade may not always be equipped with the kind of time or knowledge it requires. Due to how far technology has come, there are multiple ways to address these problems. Today, we will talk about the new automated trading methods such as copy trading and mirror trading while also assessing the method that would suit you best. Visit MultiBank Group

Mirror trading

Mirror trading, as the name itself suggests, refers to the practice of replicating the trading methodology of various other traders. Mirror trading is essentially a trade selection strategy which is largely used in Forex markets. Mirror trading has advanced over the years and though it is not a new concept, it has undergone several changes with the help of big data and artificial intelligence. Consequently, mirror trading signals can be considered trustworthy due to the precision they offer. They are a good fit for people who like to approach forex trading in a hands-off manner.

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The key disadvantage to mirror trading is that you have to mimic each and everything. You don’t get to choose and select the signals you could use as a guideline since the whole process is fairly automatic.

Pros

Less human emotions:

As mirror trading establishes if a deal is opened, closed, or changed, it rules out the worries or concerns that come with trading choices. This is particularly useful for beginners for whom the market could seem overwhelming. Instead of being concerned about the everyday changes in the market, an investor is able to review their mirror trading account’s profitability in a few quick and simple steps using the automatic trading bot to determine if they should continue with the present method.

Authentic results:

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Mirror trading forex brokers generally study, check as well as authenticate the outcomes of their trading method they use to be able to filter out lost trades. When selecting a forex broker that provides mirror trading, investors must check the ways in which the outcomes of a strategy have been verified to ensure accuracy.

Cons

Strategy robustness:

Some mirror trading methods could do well in certain market situations. A strategy, for instance, could perform immensely well in surging markets but may not be so successful in range-tied markets. To assess the durability of a strategy, investors need to analyze the different results it brings in various market circumstances.

Risk evaluation:

Even though it is not difficult to tell if a mirror trade account is profitable,  what turns out to be more challenging to understand is the risks taken to make that amount of profit.

Copy Trading

Copy trading can be considered a variation of mirror trading. Contrary to mirror trading, which demands you to follow each and every signal without any human intervention, copy trading enables you to pick the exact trader whose trades you’d like to copy. When that trader opens a position, the same will be copied to your trading account.

Despite the fact that copy trading is also completely automated, you could choose to follow different traders at different times. Additionally, on the basis of the platform’s capabilities, you could look at the movements of various traders to trade various currency pairings.

Pros

Accessibility:

An interesting as well as easy to access point of entry into trading is copy trading. It can now be accessed easily because of the notable advancements in social trading and the many different social trading networks.

Improve your trading skills

With help of copy trading, you could mimic the trading strategies of veteran traders who may bring with them decades of knowledge as well as experience. As you imitate their performance to create your trade, you could have several different learnings from the trades of others.

Diversification:

Since there is a huge selection of different trading techniques which one could access, you could now spread out your portfolio between different providers across different assets. You could bring down losses should a trader perform poorly as you spread out the risks involved with individual picks and thus earn from different market conditions.

Extra time:

Since the trader you choose keeps an eye on the markets and trading, you could keep trading throughout the day. It allows you more time to pursue other interests.

Cons

Market disasters:

Similar to trading in any financial market, copy trading could also turn out to be risky for your funds. Given the intrinsic market risk associated, you could inevitably lose your money should your chosen trader trades in unprofitable assets.

Trader biographies:

It could be challenging to choose a trustworthy long-term trader whose trades you can copy. To begin with, make sure you properly research well enough so you’re able to understand the merchants you chose. Sometimes the outcomes may turn out to be too good to be true, or a trader could be on a roll and thus a drop is likely.

Execution risk:

This is the case with financial transactions, copy trading not being an exception–it is risky if the assets exchanged are not liquid making it hard to come out of the positions maintained. You need to take into consideration factors like the fees which are associated with the copy trader’s returns and whether the bid/offer difference gets reflected in the returns made open.

Copy trading or mirror trading: Which should you pick?

Even once you learn about the pros and cons of copy trading and mirror trading, it would seem difficult to assess the style of trading which could work for you. At the end of the day, you may have to choose on the basis of your individual conditions and market goals.

Copy Trading Is Ideal For:

  • New traders who’d want expertise at low risk.
  • The ones who often make poor investment choices driven by emotions, also called  FOMO.
  • Traders who may not have enough time to spend on graph analysis and marketplace trend analysis.
  • The ones who are looking for a hands-off trading style.

Mirror Trading Is Ideal For:

  • Traders who are technologically sound and can understand the way trading algorithms function.
  • The ones who often make poor investment choices driven by emotions, also called  FOMO.
  • Traders who possess a lot of cash for an initial investment.

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