Forex trading doesn't have to be too hard for regular investors. Technology has changed and now you don't need to spend hours analyzing the markets and place your trades. You can leverage the trade copying technology to copy exact trades from other professional traders who are successful and know what they are doing with their money. For new traders, statistically 85% of them who just get started blow their accounts in less than 6 months. Now you can use ForexTime, the most trusted and regulated broker in the world, to copy trades from other traders who have consistent winning results.
Potential Risk/Reward in Copying Trades
Knowing the risk is so important for a successful trading. Everything has risk involved. So is the trade copying. When you copy a trader, it means all the trades he/she takes will be automatically copied into your account in the same proportion of that trader's account. All the data and performance are all his/her past performance, and it has no way to guarantee the same future performance. That's why choosing a good trader is so important. Be aware that it is not a 100% sure game. However, you can analyze the traders' past performance to see their trading style or strategy. Through this, you understand the risk that the traders may take in their trading. You see how long you should keep your capital with them to see the same result. Most successful traders trade for a long term profitability; thus, do not rush to withdraw your capital from him/her. Give it enough time to show. Through the past statistics available on ForexTime, you can see lots of information.
How to Identify Good Traders to Copy Trades
It's not very difficult to pick a good trader to copy trades into your account. ForexTime has its good built-in ranking system that you just need to turn on the tab "Top Strategy Managers Only". The platform will show the top traders ranking. However, you don't just go and choose the number 1 trader right away. You can click on each trader and analyze his trading style and performance. I will show my own strategy to pick a good trader to copy trades. Note that this is my personal way and experience to choose the traders. It doesn't guarantee the perfect way to do that.
First, I look at the overall performance chart since his start of trading on the broker. I look for a consistent up movement of account balance. Looking at the overall chart, we can also understand his trading style whether he is using scalping or swing trading style. Scalping trading means taking many trades during the day and take a small profit gain. Scalping trades sometimes last for minutes or to 1 hour maximum. Scalping takes advantage of quick price movement. Scalping usually trades on 1mn to 15mn charts. Swing trading is trading on long time frames such as 1 hour to day or even week. Swing trades might take 1 to 3 days to close the positions. I prefer swing traders personally. They take few trades but profit lots of pips for each trade. However, profiting lots of pips means potential lots of pips lost as well. But trading long term trades is more in line with institutional traders. For example, this trader who is currently number 1 in ForexTime ranking.
To my analysis, this trader is a good long term trader and he takes swing trading style. He takes few trades but each of his trades win many hundreds to thousands of pips. You should also pay attention to his drawdown on the chart above. He also occasionally gets hit to his stop-loss, which caused the drawdown.
Above is the snapshot of the same trader. This shows that he makes about 35.64% per month or 13.67% per week. His all time growth is 3536.62%. He has the maximum drawdown when he lost of 44.16%. Average daily win and loss are also important to consider. His total time on the broker and trading is 212 days. You should avoid traders who has traded less than 30 days. They are too new to judge his performance. I think it's even better to pick traders with more than 2 months on the platform.
The risk level should be 3 maximum. The number of followers is also a good indication that his followers stick to him and are making money with him. This trader has 696 followers at the moment and the total fund on management is 1.1M$, which shows that lots of money are being managed so the strategy manager should have a solid trading performance.
The maximum drawdown is also an important indicator of a good trader. It shows how he takes care of the losses he incurred. The above trader is good but the little bad point of his performance is 44% drawdown, which is almost 50% of the account. Note that the figures shown on the platform might not be too accurate. There are more information in the chart tab where you can find out even more information about his past trading.
Each strategy manager on ForexTime set his/her commission rate on profit the followers make each month. It is usually 30%, and there is no guarantee of you making profits. You should carefully assess the risk. Each trader allows the minimum capital to start. Most traders allow 100$ to start. You can start investing with a trader with a low amount like 100$ first to see the trader's real performance before considering adding more capital.
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