Copy Trading Platforms and Software 2021

As one of the most hands-off investing strategies, it’s clear why copy trading is popular – but does it work? We’ve created a comprehensive guide to copy trading in 2021. We review the pros and cons, explain how it works and the risks involved. We also share our tips to finding the best platforms and software for copy trading in the UK.

What Is Copy Trading?

The definition of copycat trading is simple: an investor selects an experienced trader with proven results who matches their risk profile, and copies their trades.

Trades can either be copied automatically using software from the multiple vendors on the market, or can be placed manually by communities of traders communicating their ‘signals’ via social platforms or forums.

Traders are either ‘Masters’ or ‘Followers’. Followers are essentially ‘making a copy’ of Master trading accounts.

This system requires minimal time and knowledge and could potentially bring hefty profits for those following the correct trader. This makes it great for beginners or those who are time poor. However, there is no upside without risk, meaning investors can experience losses if the Master trader is wrong.

Copy Trading Software

There are many trading platforms and applications that enable copy trading, making it an easy strategy to follow. Investors can choose between third-party software available at multiple providers and exclusive copy trading platforms.

MetaTrader 4 (MT4)

MT4 is offered by some of the best brokers in the business, including Pepperstone, AvaTrade, FXTM, XM, and Alpari. Access the MetaTrader 4 copy trading function via the ‘Signals’ tab on webtrader, desktop or mobile apps.

Master trader rankings make it easy to choose the best performers
Available on both live and demo accounts
Over 3,200 free and paid signals
Chat function
VPS service

MetaTrader 5 (MT5)

Copy trading on the MT5 system is also available through their ‘Signals’ service on web and mobile. MT5 offers the added benefit of copying trades executed at different brokerages. This is another popular platform with top companies, including BDSwiss.

Fully automated trades, just set your signal parameters
Ultra-fast and secure data transmission
Fixed signal subscription price

cTrader

The cTrader Copy function is fully integrated into the cTrader platform and offers reliable trading with a defined fees system and transparent strategy history. Popular websites that use cTrader include OctaFX.

Copy investing account is separate from trading account
Strong cTrader community
Equity-to-equity ratios

ZuluTrade

ZuluTrade has become a big player on the automated trading scene since its inception in 2007. Increasingly, brokers such as VantageFX are partnering with the firm.

Over 10,000 traders resulting in a strong choice of strategies
Feature-rich, including ZuluScript trading bot (i.e Expert Advisors or EA)
No limit on the number of traders you can follow, allowing for diversification

DupliTrade

DupliTrade is a leading provider of copy trading services across forex, crypto and stock markets. Clients benefit from transparent fees, easy registration and copy trading in offline mode.

Scale up and down options
Minimum trading deposits from $2,000
Tough review process for Master traders

eToro

eToro is one of the biggest brokers for social and copy trading.

Free account, zero commission on stocks and no management fees
Education centre with PDF guides and details of how it works
Huge social community

eToro copy trading platform

Coinbase began offering the service in 2019. And as of 2018, the nanotrading service XTrend also offers the feature. Other notable copy trading providers include MyFXBook (available on IC Markets) and FBS CopyTrade. Furthermore, Zignaly, a trading bot (EA) which specialises in crypto copy trading on notable exchanges such as Binance.

Copy trading and social trading are different but closely linked. Copy trading usually refers to automated trades that are tied to a Master trader or manual trades that are made based on signals shared.

Social trading is when the trader still executes their own positions but communicates with and trusts in the signals provided by a network of more experienced traders. These interactions might be through a signals provider, the trading platform itself, or via a social network such as Telegram.

For example, eToro’s software allows you to tie your account to another trader’s (copy trading). But you can also review activity using their social news feed (social trading).

Further still, mirror trading involves the automated copying of trades, but a more complex version which lends itself to more frequent position movement. For this reason, it is mainly used by institutional investors with large capital that can take steeper losses.

Copy Trading Markets

You can copy trade on multiple popular financial markets:

Stock and shares
Cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH) and Litecoin (LTC)
Forex pairs such as USD/GBP, EUR/USD and USD/CAD
Commodities such as gold, platinum and crude oil
Indices such as FTSE, NASDAQ and Dow Jones
CFDs

Note depending on your broker and the software they use, copy trading may only be available on some instruments. For example, forex signals tend to be available on most of the best platforms, but for the stock market, signals are less common.

Copy Trading Strategies

Does copy trading work? The short answer is, yes. But there are several factors that can impact the systems you use.

Risk Profile

Do your research and select a Master trader with a risk profile and strategy that you’re comfortable with. Do they pursue day trading whilst you prefer a more long-term ‘buy and hold’ method? Do you trust in big, well thought through bets rather than small scalping trades? These are crucial decisions when choosing who to copy – trust is key.

Manual Or Automatic

Automatic copy trades are the ultimate hands-off investments. But there are downsides, as you’re not able to review the trade for yourself. Losses could rack up without your knowledge if you’re not considering a trade before you place it, so many traders prefer to take a signal and place the trade themselves.

MetaTrader copy trading

Services such as NinjaTrader enable automatic trades whereas LiteForex provides networking tools for traders to exchange strategies and research. The IQ Copy trading robot also receives popular reviews and is free to download.

Broker Specific Trading

Some platforms allow you to copy trades from a different broker to that which you trade with. This enables you to select from a wider pool of Master traders and could allow better diversification of your portfolio.

Stop Losses

Automatic trades can mean automatic losses. So, consider using strategic stop losses to minimise this. On the downside, this can oust you from a trading strategy just before it starts winning, so place stops carefully.

Benefits Of Copy Trading

Beat The Fees

Investing in a hedge fund can mean costly fees and commissions. Copy trading means you can reap the rewards of profitable traders without paying through the nose. A typical hedge fund charges 2% in fees plus 20% depending on fund performance.

Check out the fees leveraged by your broker to see what you’re saving.

For Beginners

Trading successfully relies on intricate knowledge and experience. If you’re a beginner, you don’t have this edge yet. So, you may want to copy trade until you understand what it takes to successfully and consistently make profits.

Time Saving

With bots automatically executing your trades, there’s all the benefit without the time commitment.

Disadvantages Of Copy Trading

Long Haul

Even the best traders won’t make a profit 100% of the time, so you’ll need to trust in the strategy of the Master you’ve chosen. If you’re likely to pivot between traders after a couple of losses believing their strategy doesn’t work – copy trading may not be suitable for you.

Market Psychology

Trading is all about psychology. While some assets have a physical presence, like gold or crude oil, most are traded on value. And value is determined by what people will pay.

Therefore, if a large community of social traders begin unloading shares in a company, this could push the value of the stock down, regardless of the firm’s underlying profits.

In reality, professional traders exchange millions of pounds of stocks and share each day, so retail trading activity has less influence on value.

However, for this reason top traders often keep their strategy top secret. Therefore you may consider why any Master traders would let you copy their positions.

Master Profits

So, why would a Master let you copy their trades? The answer is commission. And this means there could be a conflict of interest.

If a Master is making profit from commission on copy trades, they may not need to run their portfolio at a profit for them to be winning. They just need to tempt enough followers to copy them.

Of course, this is a cynical view. And clearly Masters make more money from trading profitably as well. But, it highlights the importance of making sure those you copy have equal skin in the game. If you lose, do they lose too?

There are some signal services out there that are scams and are just looking for the commission – so it’s crucial to research where your signals are coming from and consider whether you trust the source.

How To Open A Copy Trading Account

So now we’ve explained all you need to know, you may be wondering how to start trading?

Firstly, you’ll need to open an account with a trading broker, making sure to choose one with copying trading functionality enabled software. You can copy trade on both real and demo accounts. Real accounts will require a minimum deposit to begin.

Download the trading platform and log in using the credentials required by your broker. Alternatively, select one of the mobile apps available on both Android (APK) and Apple (iOS) devices.

Wrapping Up

Copy trading has catapulted to popularity in the past 10 years. The range of software on the market makes it easy to choose a provider that suits you.

There are thousands of copy trading success stories. But, whether copy trading is good or bad for your profits depends on whose trades you copy and whether your capital allows you to follow a strategy in entirety. So, ensure you’ve done your research before you invest.

If you’re a beginner who is aware of the risks, copy trading could be a successful strategy compared to trading alone.

FAQ

Is Copy Trading Legal?

Yes, copy trading is legal and is supported by most regulatory boards including the FCA.

The European Securities and Markets Authority (ESMA) has assessed that copy trading software that automatically executes trades on behalf of an investor could be considered portfolio management and at the very least, signals can be considered investment advice and therefore such activities should be regulated.

Not all UK brokers that offer copy trading are regulated, so make sure you check before you trade.

Is Copy Trading Halal?

Copy trading can be halal as long as the trades being copied comply with Sharia law. Check with your broker whether halal copy trading is possible.

Where Can I Copy Trade?

Copy trading is available at many leading UK brokers. See our list of top apps and software for further details.

Does Copy Trading Work?

Yes, copy trading can work. But you’re only as good as your signals, so be careful to select the right source. Look for copy trading tutorial videos on YouTube or check out our guide as a starting point.

Is Copy Trading Right For Me?

Becoming a forex trading guru doesn’t happen overnight. So copy trading is great for beginners or those with little time.