AMarkets: Liquor by cop trading
Copy trading involves copying transactions of other traders. This method of investing allows you to trade with a small deposit without the need to understand the intricacies of the market. In the case of copitraiding, all this is a “headache” of the control trader or signal provider. The investor, in turn, can set the amount of the maximum allowable risk.
It can be said that cop trading originated in 2005. Then many traders in the process of automated trading started copying certain algorithms. Brokers assessed what potential the system has for copying transactions. Such a system removed the need to track signals by e-mail or in special trading chats. Since then, copitrading has become very popular.
How copitrading works
Copitrading refers to so-called social trading. Signals are provided by the signal supplier. This happens according to the following scheme:
At the first stage, the signals from the supplier go to the site, who is an intermediary. Then they come to brokers who have concluded a partnership agreement. in the second stage, signals reach subscribers who can reproduce them in automatic mode or filter them, choosing the most successful ones, in their opinion.
Types of copitraiding
In copitraiding, three directions can be distinguished. Consider them in more detail:
Trading platform service MetaTrader. The site mql5.com collected all the necessary information on providers, as well as statistics. To access to the signals, press the corresponding button. Then the investor selects the subscription type. Specialized broker service. This type of copytrading is based on the payment of bonuses to signal providers who own the broker master accounts. This includes the AMarkets RAMM service. Third-party software. Such software includes trading robots that are embedded in the platform. They are also called advisers, and they are different in complexity. It can also be a separate program.
Copying of signals on services
This type of signal copying implies payment of signals by subscription. Usually each broker has a similar service. The main inconvenience of this type of copitrading is that in order to transfer signals from the supplier to the investor, the terminal of the latter must be turned on.
PAMM accounts are another type of copitraiding. This method implies that the investor gives his funds to trust. Managing director is a professional trader whose income is generated by changes in currency quotes. Such copitrading is distinguished by a number of features.
First of all, you can invest a very small amount. Usually the minimum amount is $100; In order to make a stable profit, it is important to choose a good manager; The managing trader gets access to the investor’s funds for the duration of the agreement; For the term of the agreement, the investor cannot influence the trade;
The income from the trade is transferred to the investor’s account, and the manager receives a specified percentage of the profit.
RAMM-account can be called an “advanced” alternative to PAMM-investing, since it has a built-in risk management system. It allows you to copy transactions of several managers at once. The features of RAMM accounts include:
Signals are copied with 100% accuracy; Transactions are transferred taking into account the correction factor, which guarantees profitability of trade even with a small deposit; the Investor may adjust the amount of the maximum account drawdown by setting the allowable level of risk. If this value is reached, trading is automatically terminated; Since the manager receives a percentage of the investor’s profit, he is interested in the results of trading; the Investor can simultaneously open transactions in his account; Investor funds are not transferred to the account of the manager trader. He retains full control over them and can close the deal or withdraw at any time means;
Advantages and disadvantages of copitraiding
Copitraiding has both advantages and disadvantages. The advantages include:
The opportunity to invest without the necessary knowledge and skills. To do this, the knowledge and skills of managers and signal providers are used; the investor has the opportunity to choose the most appropriate trading style based on statistics provided by the broker; the investor should not spend much time in front of the monitor, evaluating the market in search The best entry points; the ability to diversify risks by selecting multiple signal providers.
As far as flaws are concerned, there are not many, but they are also present:
High risk. No matter how professional the manager, he may also have periods of unsuccessful trade, which, of course, affects the investor; Inability to develop professionally. By copying other people’s transactions, the investor loses skills in market analysis and in the future it will be difficult for him to trade independently;
How it can be seen that copitrading is a very useful trading tool that expands the capabilities of the investor. With a competent choice of signal supplier and control trader, you can tune for stable profit. Nevertheless, copitraiding is not a magic wand and does not save the investor from risk.