We'll help you map out a plan to fix the problems in your trading and get you to the next level. Answer a few questions on our application and then choose a time that works for you.
BOOK YOUR FREE STRATEGY SESSION NOW >>Copy Trading is a fairly widespread technique that allows you to “copy” the trades of other traders via special platforms.
It’s a growing business that has generated some billion dollars in revenue in the recent few years, worldwide, proving its popularity especially among the younger generation.
But what lies beneath the surface? Is Copy Trading really as easy and effective as advertised?
There are many questions, and we try to answer the most important ones in this video!
By watching, you’ll discover:
-The characteristics of Copy Trading
-The fundamental challenges of Copy Trading
-The Importance of Training in Trading
Enjoy the video! 😉
Introduction
Hi there, is copy trading a scam? This is a technique that's popular and well-advertised.
One of the coaches at Unger Academy here and today we want to understand if Copy Trading is all it's cracked up to be, or if there might be a scam behind it.
Before we determine whether copy trading is legit or not, let's quickly see how it works.
Copy Trading is big business in 2022 alone. It generated nearly 2.5 billion dollars.
A billion of that comes from Europe alone.
Asia accounts for 50% of the total.
While America and Canada appear to have less confidence in this trading technique, all age groups are giving it a try.
Under 25s are making up 44%, and 32% of traders are between 25 and 35.
The not-so-young, like myself in the 35-to-55-year age group, represent 17%, and those over 55 make up 7%.
So, it looks like it gets less popular as you go up the age groups.
Maybe because as we grow older, we tend to have less trust in entrusting our investments to other people.
Understanding Copy Trading
But what is copy trading?
Let's try to understand it a bit better.
I don't know if you're familiar with it but back in school, when you didn't know anything, you would copy from your neighbor.
There are certain subjects where not only did I not know the answers, but even when copying from my neighbor, I still had no clue as to what I was copying.
Copy trading, to some extent, is similar in the sense that we mimic a trader's operations.
Let's see what's required for copy trading.
Companies offering these services, like eToro and ZuluTrade, present CopyTrading as follows:
They tell us that first and foremost, a copy trading platform is necessary.
That we need a broker to execute market transactions and, of course, a trader from whom to copy the trades and initial capital to invest.
And they say we don't have to do much.
In a way they’re right, becouse the copy trading platform is offered by the provider, who also serves as a broker.
So we don't even have to worry about finding a broker and linking it to the trading platform.
They also provide us with the trader to copy, and they offer many of them.
But the capital, sadly, well…We have to provide that ourselves.
So, it seems like it's all ready to go out of the box.
Considerations before Starting Copy Trading
But is it really that simple?
Other questions we should be asking ourselves before starting to trade:
For example, which trader should we choose?
How can we select the best trader to copy?
They are so many to choose from.
Platforms are filled with traders and their performance rankings, showcasing all the profitable traders.
But assuming these are genuinely profitable traders and haven't hidden the poor performers, how can we choose between trader A or trader B?
For example, what criteria can we rely on?
It’s solely based on the performance achieved in the last period?
How do we know which instruments they traded, for example?
Are we familiar with them?
Do we know the difference between a derivative or another instrument?
A future or a CFD, as opposed to stocks?
Are we aware of the risk to which we’re exposing our capital?
Can we quantify the risk?
Do we know what risk is?
Can we even ask this question?
What kind of risk control do we have without being able to quantify it?
We can't define it at all, and we won't have any control.
We’ll be at the mercy of the wind, copying the directions given by a new friend, the trader.
Risks and Challenges of Copy Trading
Lastly, and the ultimate question of all is: am I diving into this without any training?
Those questions we mentioned earlier need answers.
But to answer them, we need to educate ourselves, understand what financial instruments are, what risks they entail.
But we do know nothing about this.
So, behind each of these questions lies a risk that unfortunately we'll have to bear.
To return to the starting point, it might be as genuinely easy and as simple as they present, but we must be willing to shoulder all the risks.
So, is copy trading a scam or not?
We can say it's not a scam, but from everything we've seen, it's certainly a challenging technique to manage.
And it's also very difficult to consistently generate profits.
It's presented to us as a shortcut, and we're told that all we need to do is follow someone else.
However, this leaves us with all the difficulties of handling what happens to us.
With a good level of awareness, we might frequently find ourselves handling loss situations without knowing why or what to do.
The total absence of training is presented as a form of simplicity in our favor.
But it hides the fact that they want us to start trading right away with almost no knowledge, so that we will always need someone else, a trader by our side to copy from in order to trade in the markets.
Conclusion
All right, so today we wanted to give you a quick overview of copy trading and the pros and cons of this technique that have become so trendy in recent years.
I hope it has helped you gain some clarity on the opportunities and risks associated with this practice.
If you have options or questions you'd like to share with us, please let us know in the comments below.
If, on the other hand, you need assistance in starting to invest in the markets systematically, then I recommend clicking on the link below.
From there, you can sign up for a free presentation by Andrea Unger or get our best-selling book, "The Unger Method," covering only the shipping costs.
Or you could even book a call with a member of our team to get a free strategic consultation.
See you soon with new videos on systematic trading.
Until next time. Bye bye for now!
We'll help you map out a plan to fix the problems in your trading and get you to the next level. Answer a few questions on our application and then choose a time that works for you.
BOOK YOUR FREE STRATEGY SESSION NOW >>Andrea Unger here and I help retail traders to improve their trading, scientifically. I went from being a cog in the machine in a multinational company to the only 4-Time World Trading Champion in a little more than 10 years.
I've been a professional trader since 2001 and in 2008 I became World Champion using just 4 automated trading systems.
In 2015 I founded Unger Academy, where I teach my method of developing effecting trading strategies: a scientific, replicable and universal method, based on numbers and statistics, not hunches, which led me and my students to become Champions again and again.
Now I'm here to help you learn how to develop your own strategies, autonomously. This channel will help you improve your trading, know the markets better, and apply the scientific method to financial markets.
Becoming a trader is harder than you think, but if you have passion, will, and sufficient capital, you'll learn how to code and develop effective strategies, manage risk, and diversify a portfolio of trading systems to greatly improve your chances of becoming successful.
