What is copy trading?
Copy trading is an investment strategy where investors copy the portfolio and trade of more experienced or successful investors. It enables them to benefit from the expertise and success of these traders without needing the same amount of knowledge or experience.
Copy-trading has become popular in recent years as it offers a simple way for investors to get started in the markets without spending a lot of time researching investments. It also offers potential returns often higher than what can be achieved through traditional investing methods.
The Singaporean stock exchange offers many platforms that allow investors to copy trade. They provide access to a wide range of investment products, including stocks, bonds, ETFs and even commodities. Copy trading is a relatively new concept, and some risks are still involved. It is important to remember that even the most successful investors can lose money, and you should only invest what you can afford to lose.
Why use copy trading?
Copy-trading offers many advantages, so it has become popular in recent years.
- It’s a simple way to get started in the markets: You don’t need to have any experience or knowledge of the markets with copy trading. You need to choose an investment platform and find a trader to copy. The platform will then automatically copy the trades that the trader makes.
- It offers potential returns: Copy trading can offer higher potential returns than traditional investing methods, as you effectively benefit from successful traders’ expertise.
- It’s flexible: You can choose how much money you want to invest and how often you trade. You can also choose to stop copy trading at any time.
- It’s transparent: All of the information you need to make an informed decision about who to copy is readily available on investment platforms. It includes statistics on the trader’s performance and details on their trade history.
What are the risks?
Copy trading is a relatively new concept, and some risks are involved. Here are some of the things you should keep in mind before getting started:
- Copy trading is not guaranteed to make you money: Even the most successful investors can lose money, and you should only invest what you can afford to lose.
- Your capital is at risk: When you copy trade, your capital is at risk. Meaning you could lose all of the money you invested.
- You may not have the same level of control: When you copy trade, you are giving up some control over your investment. It’s because you are relying on the decisions made by the trader you are copying.
How to start copy trading?
If you’re interested in copy trading, you need to choose an investment platform catering to the Singaporean market, like Saxo Bank or IG. Many platforms offer copy trading, so it’s essential to compare the features and fees offered by each one before making a decision.
Once you have chosen a platform, you need to find a trader to copy. Investment platforms typically have a directory of traders that you can browse through. When choosing a trader to copy, it’s essential to look at their performance history and risk profile.
After finding a trader to copy, you need to decide how much money you want to invest. Most platforms allow you to set up automatic copying, which means that your investment will automatically be copied every time the trader makes a trade.
You can also choose to copy the trades that the trader makes manually. It gives you more control over your investment, but it also requires more work.
Once you’ve chosen a platform and a trader to copy, all you need is to wait for the profits to roll in. Copy trading is a simple way to benefit from the expertise of successful stock traders without having to put in the hard work yourself.