How to select the best traders to copy
In the first place, do you want a novice manager or do you want to follow someone with a large and winner track record?
Of course we all expect to have or money in experienced hands, so why are you following guys with 2 months track record? After all it could be luck! For this reason we recommend you to follow traders with more than 1 year of experience or at least 200 operations done. If not, your money could be managed by a loser.
2. Consistent returns
It seems logical, but many people are following a magic trader with 200% ROI. Come on guys, we all know this is impossible. Besides, if you see the chart, he probably has done 2 or 3 awesome operations and then some dozens of little operations. Someone who has earned all his money in 2-3 trades is not a good choice, is it luck? Does he really know when the big deal comes? We don’t know it, and we don’t want to expose our money to uncertainty.
We need confidence, all traders have positive and negatives months, so we need to be sure that a negative month is part of the strategy and not a mistake.
Here, we can’t follow a single ratio, we need to be smarter. So, a good way is to follow someone who trades with a real account; if he risks his own money we can assume that he will be a bit more prudent.
Another way, see how many people with real accounts are following the trader. The more the best! If other investors are copying the trader is because they are winning, so why not you?
4. Key performance ratios
Many social trading sites share the strategy description or trader’s comments. This is a great way to select the best traders to copy, because you can see if the strategy is aligned with your needs.
So searching traders with large amounts of trading operations is a great idea if they don’t do these operations in the same underlying and in the same moment. Instead, search for traders who diversify trading operations among various underlying. This way, your chances to win are fairly better.
Sometimes you have to pay commissions to follow a trader and others paying a spread for each trading operation is enough. Either way, if the trader does not earn enough to cover trading fees you will copy a successful strategy but your account will not be profitable. Seems logical, but many people has troubles in this step and I’m going to explain you why.
Most people search for trader who earn all the time, to do so, some traders do very fast operations where they earn 1-2 pips and after some hundreds of operations they get a great performance chart. But if you have to pay 1-2 pips for each trading operation, then you will be doing 0 in each transaction and you will lose sooner or later.
So, be careful and search strategies which have at least 4 or 5 pips on average in each operation. This way you can afford all trading fees without surprises.
6. Bonus tip
Finally, social trading platforms are great to copy traders but sometimes lack a bit of impartiality when they value their own traders. In order to know which are the best traders we highly recommend you to use zulu4me.
They analyze all Zulutrade traders and give them a rating (more or less dangerous) and a score (more or less profitable). In the same way, you can also see real winner user’s portfolios, so you can copy the same than the most profitable guy in the network.
Probably the most useful tool are their portfolios, they create portfolios and have a historical performance for each of them.
If you need more information do not hesitate to contact us, it will be a pleasure to assist you.
Remember that you have all the information about copy trading in our sections:
- Platforms: Information of each of the platforms of copy trading. Go to Platforms
- Guides: The best guides on copy trading. Go to Guides
- Reviews: Best reviews on copy trading platforms. Go to Reviews
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Currency trading with leverage implies an important risk for the investor and there is always the possibility of losses. These instruments carry a high risk if they are not managed properly and a profit can quickly become loss as a result of price changes. Due to the risk factor inherent to this type of trade, only funds intended for risk investments should be used. If you do not have extra capital you may be willing to lose, you should not trade in the forex market. It has never been proven that there is any system or portfolio of systems that is completely safe and no one can insure future profits or losses. Before you start trading in the forex market you should think carefully about your goals as an investor, your level as an investor and your risk aversion to determine if this is the type of investment you want to make. If you are in doubt you should seek advice from a professional financial advisor to advise you about the investment.