Why Every New Trader Should Start Copy Trading First
The unfortunate reality is that 96% of new traders lose money when they first get into the game. That makes sense, right? There’s a hell of a lot to learn, and sometimes traders can dive off the deep end before they’re fully prepared. But what if you could start trading right now, and still see returns? We’ll be taking a look at why every new trader should start copy trading first, and how you can benefit from this powerful mechanism.
What is copy trading?
In essence, copy trading is when you copy the positions of another trader, using some kind of automated tool. eToro is the world’s leading social trading, and it offers an excellent copying mechanism.
You can choose to copy traders from all walks of life, trading a variety of asset classes using different trading strategies. Some of the asset classes available to trade on eToro are stocks, commodities, ETFs, indices, currencies, and cryptocurrencies.
Why you should start copy trading on eToro today
Now, let’s take a look at why every new trader should start copy trading first. As mentioned before, 96% of new traders lose money and end up quitting trading. There’s so much to learn when you first start out, and the likelihood of seeing an investment turn sour is far too high.
Using a tool like copy trading means that you can see returns from the very first day, even while learning the ropes. You don’t have to take a complete hand-off approach to trading just because you’re copying. You can choose to engage with the trades happening on your portfolio, and really try to learn why the traders you’re copying are doing their thing.
There are some basic rules to copying on eToro. Firstly, never invest more than you can afford to lose. Some traders may suggest copying them with a minimum of $1,000 (for example), but if you can only afford $500 that’s perfectly fine. There are absolutely still risks to copy trading, so rather stay on the safe side and build up as you go along. You’ll still see returns on a smaller amount, there’s nothing wrong with taking things slow.
Then, you’ll definitely want to set your Stop Loss / Profit margins - these add an extra layer of security to your portfolio.
After that, do some sincere research on the trader(s) you’re planning to copy. Look into their feed, social media, and see what they’ve written about themselves. What is their trading strategy, and does it align with yours? These are all important things that you should really try to understand before diving.
Finally, acknowledge that you won’t know everything about trading when you first start out - that’s precisely what copy trading is for. You can learn as you go, and if you feel prepared enough to go it alone (or want to), then take it that step further.
Copy trading on eToro doesn’t guarantee a profit, but it certainly puts you one step closer
So, we’ve taken a look at why every new trader should start copy trading first. Copy trading is the ideal tool for novices to get their feet in the trading world, which isn’t exactly kind to newbies. Don’t invest more than you can afford to lose, and remember that you can still choose to learn a new skill as you copy trade. Give eToro a try, and start profiting today.
Disclaimer: 75% of retail investor accounts lose money when trading CFDs with this provider. Virtual currencies are highly volatile. Your capital is at risk.