How to Copy Trade with MetaTrader

Alexandros Theophanopoulos
20 Min read

Learning to invest is a process and not all investors have the time, resources, or interest in it. Instead, they look for a way to copy the trades of successful traders.

With copy trading, you can benefit from the research, experience and decisions of other more experienced traders. Sound interesting? Read on to learn about the options you have for copy trading.

Copy Trade: An Introduction

With the introduction of online trading, international stock exchanges and the Forex and CFD markets are accessible to all traders. Anywhere in the world, at any time of the day.

Many of us want to have more control over our capital growth ourselves, but we struggle with issues like where to invest, how to invest, and when is the best time to invest.

For many, the cryptocurrency hype was the first introduction to online trading. It is an affordable way to invest. People realized there's a lot of money to be made investing and trading, but there are also risks involved.

Investors like Warren Buffett and George Soros are contemporary heroes, but there are also countless examples of traders losing money. Some of us already have some experience with trading and we may have already faced this reality. So is copy trading useful?

Technological developments mean that automatic copy trading systems are being increasingly applied on a larger scale. Forms of social trading, including this variant, have gained enormous popularity in recent years. Wondering if it would be useful to you?

Before starting with copy trading Forex you should know:

  • What is copy trading?
  • What type of investor is it useful for?
  • How to copy trades in trading with an automatic system
  • Advantages and disadvantages
  • Social trading vs copy trading
  • Everything you need to get started with copy trading: broker, trading account and platform

If you are interested in honing your skills further or testing out specific new strategies, feel free to register for a demo account, where you can practice your trading under real and live market conditions, without putting any of your funds at risk. For more information, please click the link below:

Risk Free Demo Account

Register for a Free Online Demo Account and Master Your Trading Strategy

Copy Trading: What is it?

This term is quite clear, but we do not always immediately understand what it really implies when it comes to practice. So what is copy trading?

The term copy trading or copy trade is used for all forms of trading in which the trader follows or copies the positions (trading settings) of another user (whether that's forex copy trading, stock copy trading or any other instrument).

However, different forms of copy trading can be distinguished:

  • Automatic: select a strategy that suits your trading style and level of risk tolerance. Afterwards, all the operations that the provider performs on his own trading account are automatically executed and managed on yours.
  • Semi-automatic copy trading: you will receive a notification of the operations that are carried out based on the signal you have chosen, and you can select for yourself what to copy and what not, depending on the risk management you are performing.
  • Manual copy of trades from other (more experienced) traders

In this article we will mainly focus on automatic forms of copy trading. However, we can also divide these activities into different subcategories.

We will analyze the main types so that you can determine what is best for you.

Copy Trading: Different Types

The activities that people are actually referring to when they talk about Forex copy trading can be subdivided into different categories based on some specific characteristics. The nuances can be subtle, and as a rule these systems are named the same.

However, it is important that you know, on the one hand, the differences between the traditional forms of copy trading and mirror trading and, on the other hand, the newer variants such as social trading.

We distinguish the following variants:

This system of copying operations was introduced in the 2000s and we can say that it is the original form of the current one. This copy trade service is located within the broker's trading platform.

The trader can see the characteristics and results of various strategies available on the platform. Then, you select, based on your profit targets, trading style, capital and risk tolerance level, among other things, the strategy belonging to another user that you want to copy, etc.

It basically reflects all the actions based on this trading strategy, hence the word "mirror". With mirror trading, trades are automatically copied and set up on your own account.

With this style of online trading, your trading account is directly linked to that of the trader you want to copy. Set the scale you want to maintain for your copy trade activities and then the selected user's trades are automatically configured in your account.

With this system you have the freedom to determine the amount of capital you want to use for this. Entry levels, stop loss levels and exit levels are also copied in principle (proportionally), but this can be adjusted.

In addition, the trader has the option of disabling the copying functions at any time and taking over the administration of the account.

As the name suggests, social trading adds a social element to the purest idea of copy trading. You will not only be able to copy trades or strategies, but also communicate with other traders. This system is also known as 'people-based portfolio' investing.

In this case, a trader is selected instead of a trading strategy. Users are mainly guided by the trader's profile, style and performance.

The structure of social trading largely corresponds to that of a normal social network, and has gained a lot of ground in recent years.

If you want to learn more tips and master your basics, sign up for our free forex courses, where you can get valuable trading advice from our experts to aid you in your trading journey. Please see the banner below for more information:

Forex 101

Master trading basics with industry experts

Copy Trade: Benefits

Forex copy trade is, as we have previously discussed, particularly popular with novice traders.

With the help of these systems, less experienced traders can start trading and reap the benefits of the trading decisions and techniques of experienced successful traders, or strategies that have been developed and tested over the years.

In this sense, we can say that it is a shortcut. While the choice to start in this way is a personal one and the reasons for each trader may be different, we can identify three main benefits:

✅ Benefit from the experience of other traders

  • Whether choosing and following a certain strategy or copying all the actions of another trader, the objective in fx copy trading is the same.
  • With this style of trading, people want to benefit from the performance of another trader or the results of their strategy.
  • This is the most obvious benefit and the reason why most traders go for it.

✅ Simplify the process of operating

  • Although many choose copy trading because they do not know where to invest, there are others who use these methodologies because they don't have enough time to research or control the markets.
  • In fact, it is a form of automatic trading and, therefore, can greatly simplify the technical analysis process.

✅ Facilitate actions related to the operation

  • In line with the previous points, we can identify another important reason why traders choose this type of trading.
  • Some traders may know where it's best to invest, but they struggle with practical problems: placing trades, setting stop loss orders, setting and adjusting the position size, and closing the trade.
  • With the help of a copy trading system, you can link your trading account to that of another user so that your actions are also carried out automatically on your account.

✅ See if a strategy works

  • An additional advantage of copy trading is that the trader can see how the selected strategy (or technique) is implemented.
  • Although it's not a way of learning to trade per se, the trader may have an idea of "what works" and "what doesn't work".
  • Furthermore, social trading also offers the possibility to communicate with other traders.

✅ Trading psychology

  • When systems are applied to copy trades, the most important decisions will be made automatically, by others.
  • You don't have to determine when the best time is to open, close or adjust a trade.

This will help you avoid making emotional decisions. A series of winning or losing trades could distort your vision. For example, you may miss out on good trading opportunities because you're afraid of losing a large amount. On the other hand, you could place a position too lightly if you are desperate to make up for your losses, or fall into overtrading.

If you opt for copy trading, you'll generally feel less concern about daily fluctuations in the market price or even about the results of individual trades. After all, the trader only needs to focus on the overall results of their trading account. Based on performance, you can judge whether you want to continue copying or applying the given system.

The most important advantage of a copy trading system is that it eliminates the decision-making process; After all, you have decided for yourself which system you want to implement.

However, this is also the most important weakness. You must be sure that the selected strategy is being implemented correctly and that the results presented by the trader are (reasonably) consistent.

This brings us to the question: how do you choose the best copy trading signals? Don't worry, we'll talk about that later.

Who Can Copy Trade?

Although, as we have illustrated in the previous section, we can distinguish different forms of copy trading, it basically means that you copy the trades (or trading strategies) of another investor.

And, since it can be done online, it can be undertaken from almost anywhere in the world. Copy trading UK, copy trading EU - these are very similar practices.

This style of trading is particularly popular with beginning traders who don't yet know how and what they can best invest in or those who want to benefit from the knowledge and skills of a successful trader.

Copy trading, mirror trading and social trading are forms of automatic trading and, therefore, are quite new. However, this concept has been around for much longer.

Many people follow the investment ideas of well-known investors and portfolio managers. The idea is that, in this way, they can enjoy the success of experienced traders.

Therefore, copy trading systems aren't only for beginning traders, but also for all investors who think that they can take advantage of other traders' ideas.

There is a misconception that copy trading can be used without the need for knowledge of the markets or trading.

While it can truly be a solution for beginners or traders who require a bit of support, it is not a substitute for actual learning.

In fact, traders who achieve the best results copy trading will generally be familiar with the dynamics of the market, the specific characteristics of the instrument to be traded and will have considerable knowledge of the practical execution of trading activities.

After all, you should be able to assess whether the provider or trader that you are following on a social trading network is working properly. It's not advisable to blindly trust the operations carried out, experiences and recommendations of others.

The problem is not only that it's not always clear whether they have the required experience, but it may also be that they're not entirely objective. Also, markets are constantly changing. If you choose to copy a certain strategy that is currently performing well, you may underperform in other market conditions.

You can improve all of this and more, by attending the free trading webinars offered at Admirals. Here you can discover the latest trading trends, get actionable strategies and enjoy complimentary tools for free, simply by signing up below:

Advanced Trading Webinars

Discover the latest trading trends, get actionable strategies and enjoy complimentary tools.

Is Copy Trading Safe?

The popularity of copy trading has accelerated the development of hoaxes. Social trading networks and copy trading software tools are emerging like mushrooms.

Unfortunately, the hype also causes an increase in the number of malfunctioning copy trading platforms and downright fraudulent practices or scams.

By applying a copy trade system, you link your trading performance to that of another user. That's why it is essential to investigate whether the chosen strategy produces good results.

You should also make sure that you are working with a reliable partner and that the chosen system is working properly.

▶ A common misconception is that copy trading is, by definition, better or more profitable than investing on your own. Some traders see the application of these systems as a panacea and think they can use it to replace their own judgment and research. This makes them easy prey for scammers.

Also, investment scam practices generally target novice and inexperienced traders. Before you start trading, make sure you know the dynamics of the markets and the characteristics of trading. A practical tip to avoid becoming a victim of trading scams is to trade with a reliable service provider.

A simple way to verify if such a provider is reliable is through a reputable market authority. Reliable brokers are regulated. Be aware that there are important differences between supervisor licenses.

One of the strictest regulations and one that guarantees greater safety is the UK FCA (Financial Conduct Authority).

If you make the results of your investment depend, in part, on these types of services, you must ensure that the device works correctly and that it fits your course of action. Therefore, it is important that you have some basic knowledge of the instrument to be traded, the market conditions and that you understand by what criteria your provider of copy trading signals selects the options.

In addition, it verifies how this system has worked historically and in which market conditions the best results are produced. Usually the developer will provide data themself and you can find reviews from other users on the trading forums. We all know the saying, "past results do not guarantee future results". Be wary of claims about projected earnings expectations and find out what they are based on.

⚠️ Remember that copy trading signal providers make their product as attractive as possible to attract more users. This even goes so far that certain providers invent experiences to try to attract more buyers. Historical information is the most objective, in this case, and offers us an idea of the conditions under which the system in question works better or worse.

For all this, we can say that the internet is full of signal providers and copy trading platforms that can even be considered scams. If you are looking for opinions about copy trading in forums or web pages you can find some of them. That's why our advice is not to blindly trust the marketing, promotions or reviews of these services. Always test the software first, yourself. Many auto trading software developers offer demo versions or trial periods where you can try the software for free with no obligation.

 

 

MetaTrader 5 from Admirals

Once you have successfully registered you can adjust the settings according to your personal preferences.

Is MetaTrader Effective for Copy Trading?

It is important that you research the efficiency and conversion rate of a signal provider for MT4 and MT5 before subscribing to the service and beginning your MetaTrader copy trading. For this, for example, you have the option of applying the signals directly to your MetaTrader charts. This way, you can see the application and its effectiveness in real-time.

If you opt for free signals, you also have the option to test the quality of this service without risk, in your demo account.

Via the "Signals" tab of the "Toolbox" menu in the MetaTrader 4 and MetaTrader 5 platform, you can evaluate the effectiveness and performance of the copy trading signal services at 3 different points:

  1. Historical Results: This entry provides information on the long-term performance of the signal service. If you are considering following a certain signal, it's important that you know how it has performed over a longer period (in different market conditions).
  2. Profits and losses achieved on the basis of these signals.
  3. You can see the entry and exit levels of the operations carried out based on these signals that you receive from the providers. On this basis, you can evaluate the effectiveness and reliability of the signal.

Which Broker Should I Use for Copy Trading?

Even before you can start copying trades, you have to make another important choice, in addition to choosing your tools. Your experience will be largely determined by your choice of broker. The quality of the execution, the conditions and the applicable costs can influence your results and the difference between profit and loss.

To use the MetaTrader 4 or MetaTrader 5 copy trading features, you must first open a trading account with your broker.

Be careful with your capital. Keep in mind that you should choose a broker that is regulated by a reputable market authority. Admirals is regulated by the FCA (Financial Conduct Authority), the main regulator of the UK market. Always check the trading conditions first, before choosing your broker.

You can find the full Admirals trading conditions on our website. Some of the key points are:

✔️ Start trading with a minimum deposit of only 1 euro: the exact minimum deposit depends on the type of trading account chosen and the instrument to be traded

✔️ Competitive transaction costs and spreads

✔️ A wide range of instruments available

✔️ Enjoy the protection of Admirals' exclusive "Negative Balance Protection Policy"

✔️ Free real-time market data

✔️ Free deposits and withdrawals via bank transfer, credit card payments or via iDeal, Skrill & Neteller

✔️ Coverage is possible and allowed

✔️ Supports all styles of trading

✔️ Provides access to MetaTrader 4 and MetaTrader 5 trading platforms

If you want to know more about what you should look for when choosing your broker, see our article on how to choose the best online broker. Admirals offers free demo accounts with which you can use the MT4 and MT5 platforms and the built-in MetaTrader copy trading tools.

Interested in finding out what else you can trade at Admirals? Click on the banner below and discover thousands of stocks and ETFs right here at your fingertips:

Invest in the world’s top instruments

Thousands of stocks and ETFs at your fingertips

How to Copy Trade with MetaTrader: Conclusion

The purpose of this article is to provide information on the characteristics, advantages and disadvantages of copy trading. Whether the application of signals to copy trades is a suitable option for you will depend on your trader profile and your needs. We hope you have enough information to make an informed decision.

Perhaps the most surprising advantage of this system is that it gives the trader greater freedom. You don't have to sit behind your computer from dawn to dusk. Plus, you won't be hampered by your own reckless and emotional choices, which can benefit your results. Some beginning traders see copy trading as a way to learn about trading: they become familiar with market dynamics and see examples of execution of a particular trading strategy.

However, the main misconception is that the trader doesn't need to know anything about trading or the markets. Of course, there will be inexperienced traders who select the correct signals and achieve good results with this. However, there are also examples of enthusiastic beginners who put all their faith in copy trade signals that don't work properly or that turn out to be scams.

You cannot blindly trust the reports of the providers of automatic trading systems with copy trades. Although it is a solution for beginning investors, it's advisable to acquire some knowledge about the market and trading. In this way, you can evaluate if your signals are working correctly. Traders who use this tool successfully claim that a combination of signal application and manual trading leads to the best results.

This doesn't mean that you should monitor all aspects of the system on a daily basis, but rather that you should measure performance periodically and intervene when necessary. For example, when the market conditions change significantly and the chosen trading signals turn out to be less effective.

Other articles that may interest you:

Frequently Asked Questions

 

What is copy trading?

Copy trading is a form of online trading where individuals can automatically copy the trading actions of experienced and successful investors, known as "traders." By utilizing a copy trading platform, you can replicate their trades in real-time, allowing you to potentially benefit from their expertise and strategies.

 

How does copy trading work?

Copy trading works by connecting your trading account to a chosen trader's account through a copy trading platform. When the trader executes a trade, it is automatically replicated in your account in proportion to the funds you've allocated for copying. You have control over the amount you invest and can stop copying at any time.

 

What are the benefits of copy trading?

Copy trading offers several benefits, including access to experienced traders' strategies without requiring in-depth market knowledge, the potential to diversify your investment portfolio, and the convenience of a passive investment approach. It allows individuals with limited time or expertise to participate in the financial markets effectively.

 

INFORMATION ABOUT ANALYTICAL MATERIALS:

The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admiral Markets investment firms operating under the Admiral Markets and Admirals trademarks (hereinafter “Admirals”). Before making any investment decisions please pay close attention to the following:
1. This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
2. Any investment decision is made by each client alone whereas Admirals shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.
3. With view to protecting the interests of our clients and the objectivity of the Analysis, Admirals has established relevant internal procedures for prevention and management of conflicts of interest.
4. The Analysis is prepared by an independent analyst (hereinafter “Author”) based on the NAME +(Position) personal estimations.
5. Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admirals does not guarantee the accuracy or completeness of any information contained within the Analysis.
6. Any kind of past or modeled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admirals for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
7. Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved.

TOP ARTICLES
Forex Trading Robots: Do Forex Robots Work?
Forex trading is remarkably versatile, offering a myriad of trading styles, strategies, and systems. The diverse community of traders encompasses those who prefer manual trading and those who opt for forex automated trading with some of the best forex robots. In this article, we delve into the compr...
Auto Trading - Using Automated Trading Software
The concept of auto trading may sound to many like a dream come true. Who wouldn't be excited at the prospect of a computer system that enters and exits trades automatically and potentially makes profit with little input from the user? But before you get carried away with the idea of automated tradi...
Copy Trading: What Is Copy Trading?
Investing and trading are no longer something only characterized to be the activity of Wall Street professionals. In the last decade, especially over the last few years, the term 'retail trader' or 'retail investor' has risen to great heights and changed the financial world as we know it. And we are...
View All