4 Major Problems People Encounter with Copy Trading – How They Can Be Fixed

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4 Major Problems People Encounter with Copy Trading – How They Can Be Fixed

Introduction to the Problems People Have with Copy Trading

Copy trading is often seen as a guaranteed way for new investors to achieve a decent return on their investment (ROI). They expect to be as successful as the traders they copy on copy trading platforms by tracking the market movements of successful traders with high-performing investments. Inexperienced investors or those who haven’t read a full guide are often unaware of the issues with copy trading platforms and how they may affect their investments and returns.

We’ll look at the most evident issues with copy trading sites in this article. These are the issues that newbie investors will almost certainly encounter when trading on these platforms.

High Commissions & Complex Fees - How to Fix Them

It is a business to copy trade. So, if there’s no upfront price, you’ll end up paying extra for the spread and overnight fees. The spread on the EUR/USD is 1 pip for most Forex brokers. However, you may spend 2 to 3 pips extra on a copy trading platform.

Solution: Find a reputable platform that provides transparent ways how to stream revenues. A good example is a fixed monthly fee like Signal Start or a profit-sharing scheme, which  ZuluTrade offers, which is a win-win for both the provider and the copier. 

No Testing Environment - How To Solve It

Most copy trading platforms don’t provide such a feature as it would overload their servers. As a remedy to this, we highly suggest you review the historical data instead as it would greatly give you enough information on how a particular trader works, their activity, their currency pairs, their risk tolerance, and profitability month-over-month. 

3 or more months would be significant enough data for you to look at. Look at the drawdowns, lot sizing, deposit load, and overall activity. This is as good as backtesting a trader’s strategy.

Technical Risks

Technical concerns are issues that can arise as a result of the operating system, server, trading software, or any other sort of technology that connects your account to the traders. The following are some of the things that could happen to you:

Subscriptions to Signal were canceled due to nonpayment.

Fix: Always keep on track with your monthly fees or pre-pay your copying fees for more than a month.
Platforms for trading go down.

Fix: Make sure that the platform is reputable enough for you to depend upon as these major platforms invest heavily in their backup servers just in case their primary server fails, plus the security and firewall enhancements. 


Because copiers lack the funds to make the same investments or transactions as the trader, their accounts do not stay in sync with their trader’s accounts.

Fix: If there’s any note that a trader provided on their description page about minimum investment, make sure that you should follow it to ensure that you’ll copy the same amount of risk and lot sizing from the trader’s account. 

Some platforms give you a way to adjust risks, so that’s one way to fix this.


The trading accounts of copiers are hacked.

This is on your end and your platform’s security strength. As we repeatedly advise on this blog, always choose a reputable platform. In addition to this, your responsibility is to make sure that you always keep your password securely, and please make your password harder to hack or guess, at least. 

Conclusion

Copy trading is a good technique for new and new forex traders to start profiting from the market as soon as they join it, even if they don’t understand it yet. It’s a way of allowing them to earn as they learn, with as little risk as possible, or at least as little risk as possible under the circumstances, by copying the trades of someone who has lowered risk through learning and experience. It has issues, but there are fixes that are here to address them.

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