How To Start Copy Trading in Australia: Stocks and Crypto

Do you like the idea of making profits using the expertise of professional investors? Then, copy trading may benefit you. This strategy allows beginner traders to automate their trading by copying the best traders.

This guide discusses how copy trading works, the best copy trading platforms, the pros and cons, and the steps to get started for beginners.

If you don't have a copy trading account yet, consider eToro, which is used by many investors in Australia and worldwide. You can create an eToro trading account HERE.

eToro AUS Capital Limited AFSL 491139. eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. See PDS and TMD

1. What Is Copy Trading?

Copy trading is an investment method that automatically copies the trade positions opened and managed by other traders.

In Australia, you can do copy trading across various financial markets, including Stocks and Indices.

Some brokers offer both manual and automated copy trading with many features.

2. Who Will Benefit From Copy Trading?

This trading style is ideal for those who need more time to understand the market thoroughly or need to learn to take trades.

Anyone can use the expertise of Pro traders to make intelligent trading decisions to maximise their profit potential.

Besides newbies, Copy trading also benefits experienced traders as they learn new and advanced trading strategies from other traders.

Thus, Copy trading is a helpful tool that frees up some of your time and helps to learn about the market and create strategies that suit your needs.

3. Is Copy Trading Legal In Australia?

In Australia, it is legitimate to copy other investors' trades to make money. There are no laws to date that ban copy trading in the country.

However, before you engage in this trading style, make sure the broker you choose is regulated and licensed by ASIC.

4. How Does Copy Trade Work?

Copy trading works by researching a profitable trader on a copy trading platform. 

Most platforms provide a filter function where one can go through the trading results of expert traders, helping make a decision on which one to follow and what trades to copy. It makes it easier to identify the one that best fits your risk appetite and trading style.

Once you discover a trader you'd like to follow and choose to replicate their trading strategy, the platform will automatically execute the same trades on your account as soon as they initiate those trades.

You have the freedom to select the exact amount you wish to invest in a trade, along with your preferred level of risk for each trade.

All investments are aligned with your budget, mirroring the percentage spent by the investor you're copying. For instance, if the copied investor allocates 1% of their trading capital, copiers will do the same.

5. What Are The Benefits Of Copy Trading?

There are plenty of advantages to copying trading. We have covered a few of them below:

• You don't need any prior knowledge and experience in trading.

• Watching the trading activity of experienced traders enables newbies to upskill their trading knowledge, familiarise themselves with the financial markets, and learn how to trade.

• Social trading networks make it an exciting and accessible route to trading.

• Traders can allocate their portfolios to numerous providers across different assets and various trade strategies to offset losses if one trader fails to perform.

6. Is Copy Trading Too Risky?

Copy trading is inherently risky, and there is always the likelihood of losing money. As a trader relies solely on the expertise and performance of the following traders, choosing an inexperienced trader can lead to losses.

Also, the traders' past performance may give an idea of their future performance. Still, it does not guarantee their success in future trades.

Besides this, there are two other types of risks, such as market risks and Liquidity risks, that a copy trader should be aware of when entering this trade.

• Market Risk: Fluctuations in prices in interest rates, stocks, and other assets, and sudden releases of high-impact news can cause the live market to become highly volatile. These can adversely impact your copied trades.

• Liquidity Risk occurs when you or your followers can not find a seller/buyer on the market, preventing you from closing a trade at a specific price and time. It happens when dealing with illiquid instruments like exotic low-cap stocks, or cryptocurrencies.

Here Are a Few Suggestions To Make Profitable Copy Trades:

• Do thorough research to select the right trader with a long-term track record of successful trades.

• Have proper risk management measures like Stop Loss that automatically exit the trade and curtail your losses 

• Invest only so much you can afford to lose.

• New traders who are anxious about losing money with copy trading should try it with a demo account before trading with real money.

7. How To Start Copy Trading Step by Step?

Anyone can start Copy Trading by opening an account with a copy trading provider, picking a trader, and clicking "follow".

Here are the simple steps to help you get started as soon as possible:

Step 1: Open A Trading Account 

The first step is to open an account with a copy trading provider. All you need to do is to complete the registration form and deposit the initial deposit.

Most trading platforms offer traders three types of copy trading features – manual, automated, and semi-automated. Traders can access a broad array of markets for copy trading, such as cryptocurrencies and stock indices.

If you don't have a copy trading account yet, consider eToro, which is used by many investors in Australia and worldwide. You can create an eToro trading account HERE.

The copy trading platform offers extensive trading features, social trading tools, and copy trading to imitate the trades of other famous traders.

eToro AUS Capital Limited AFSL 491139. eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. See PDS and TMD

eToro AUS Capital Limited AFSL 491139. eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. See PDS and TMD

Step 2: Understand The Copy Trading Terms

Though Copy trading does not require prior trading knowledge, it is good to familiarise yourself with trading terminologies before you start. The trading knowledge will also help in researching the best trader to follow.

So, here are a few Copy Trading terms you should know:

• Diversification

• Investor

• Slippage

• Technical Analysis

• Drawdown

• Mirror trading

• Social Trading

• Equity Line

• Money management

• Stop Levels

• Fundamental Analysis

• Signal Provider

• Symbols

Step 3: Choose A Trader

After your trading account is approved and active, it is time to search for and find profitable traders.

It is the only effort that traders need to put in throughout the trade. Most copy trading platforms provide a filter that applies trading metrics to narrow the search for successful traders.

The feature screens traders based on the following aspects:

• The total profit of each trader

• The total AUM

• The type of trades they take (short-term or long-term trades)

• The traded markets

• Their winning percentage

• The number of followers

• The risk level of their strategies

• The total amount of funds they manage

• Their return on investment

• Frequency of trading

In addition to the above, you must also shortlist traders that best match your trading objectives.

Choose multiple traders (instead of one) with a decent amount of trading activity, a reliable return rate, and various followers. 

It can help you improve your possibilities of success by copying. Once you have found the right trader, hit the "follow" button to copy his trades.

Step 4: Decide Your Investment Amount 

After deciding on the trader to follow, you must decide how much money you wish to allocate to each trader if you have chosen more than one person to copy. Be balanced and keep your portfolio diversified.

Do not put all your money in a single trader. It will help you manage your trading risks. Note that you will need a separate account per trader you decide to follow.

The copy trading platform will automatically replicate your trading account's chosen traders' positions. Based on the trader's performance, you can invest more funds into the trade and vice versa.

Step 5: Choose Your Trading Parameters

With adequate funds in your trading account, you can start copy trading on eToro or other popular trading platforms.

The platform will ask you to select parameters such as order amount, desired leverage, and a derivative trading pair.

eToro AUS Capital Limited AFSL 491139. eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. See PDS and TMD

Confirm your decision and click on Copy to follow the trader's moves.

Step 6: Monitor Your Trades

You must regularly log in to your trading account to see your existing trade positions and even close them manually at any time.

8. Which Broker Is Best For Copy Trading In Australia?

Each Copy trading platform uses different copy trading features. These include the minimum amount to copy trade, risk management features, and how to deposit money between the copy trading accounts.

Some platforms enable traders to place "Stop Loss orders" on the copy trading relationship to manage the risk of their copy trading activity.

As copy trading is allowed across a range of financial products, it is beneficial to identify the ones you are interested in copy trading.

Here are some well-known platforms you could consider:

eToro

• Copy trade stocks, CFDs, and crypto.

• Extensive base of traders from more than 140 countries

• 2,000+ financial instruments

• Copy trading 

• Low minimum deposit

• Multi-regulatory environment

AvaTrade Copy Trading

• Reputable CFD and Forex provider 

• Allows traders to copy trade CFD, cryptocurrency, and forex products

• Offers 3 top copy trading options as AvaSocial, DupliTrade, and Capitalise.ai to allow traders to take advantage of market volatility

• Complements its patented copy trading solution

• ASIC and six other different regulators across different continents regulate this broker.

Pepperstone

• Allows retail investors to choose from 3rd-party services such as MetaTrader signals, MyFxBook, and DupliTrade

• Trade over 1200+ financial instruments, including CFDs on FX, ETFs, Commodities, Cryptocurrencies, Stocks, and more.

• Allow copy trade forex and CFD products.

• SCB regulated broker

• Provides access to powerful tools such as MT4, MT5, cTrader, or Trading View via phone, tablet, and laptop

9. Comparison Of Brokers For Copy Trading In Australia

10. Frequently Asked Questions (FAQs)

What is Crypto Copy Trading?

Many believe that making money in cryptocurrency is a complex process that needs extensive knowledge of finance, mathematics, and technology. However, the help of several tools like Crypto copy trading makes it much easier and simpler to trade crypto. 

Crypto copy trading is among the most active investments allowing crypto traders to copy the trades of expert cryptocurrency investors, automating the entire crypto trading process. Let us look at this example to understand what crypto copy trading is.

Suppose a trader you follow spends 5% of their money on a coin. In that case, the copy trader's software will also execute the same trade with the amount of capital you wish to invest in the same coin. Thus, the automated software looks at what the followed trader is doing and replicates the same.

Today, several cryptocurrency exchanges offer the copy trading option to assist newbies benefiting from professionals who have a greater chance of entering profitable trades. Novice traders can access the professional's trades, statistics, strategies, and records, copying the trading in real-time.

How Can You Find Good Traders To Copy?

The idea of making triple-digit yearly returns by copying the trades of other traders may be tempting. It takes a lot of thought processes and research to find the right trader you need to follow to reap the benefits of this strategy.

You should track the past performance of traders when making the selection. Look for active traders with at least 1-year trading history, a return of between 10% and 30%, and place at least one trade per week.

It shows that traders are working on growing their trading base and parking their money in different trades rather than locking all of it in one trade. You may even consider spreading your copy trading between 2 to 4 traders to mitigate trading risks.

How To Choose The Right Copy Trading Provider?

With so many options available, finding the best provider is no less than a challenge.

We have listed a few things to consider when selecting the most suitable copy trading provider:

• Should have a minimum 12-month verified track record

• Should provide steady returns

• Should have a low-risk profile

• Should have a maximum historical drawdown of 30%

• Should use stop loss on all orders

When considering copy trading, never invest all your capital with a single copy trading provider.

Instead, traders tend to diversify their trading capital across different copy trading providers to minimise risk. This approach can help minimise the risk of potential losses due to reckless trading behaviour.

Is Copy Trading Safe And Profitable?

Yes and No. Copy trading can be safe and profitable if you follow professional traders with several years of trading experience and who have mastered trading and risk management skills. If you follow traders without experience, you may lose all of your money.

Remember, no matter which trader you choose. The is always a risk, as even experienced traders can make mistakes, and you will lose your money. Also, their past performance does not guarantee future results.

Moreover, copying trades on leverage can magnify your profits. However, leverage can also magnify your losses, so you must be cautious.

How Much Does Copy Trading Cost?

There are usually no special fees to use the copy trading function. However, traders must pay the following service charges such as:

• A percentage of the profit you make to the Strategy Manager

• Spreads on the trading

• Brokerage fees

• Transaction fees for trades

Can You Make Money Copy Trading?

Yes and No. Copy Trading helps analysing the markets and implementing the best trading strategies.

All you need to do is to follow the best traders who trade your preferred markets and align with your trading style and goals.

You can make decent gains, but there is no guarantee that you will. The profits you make from this trading style depend on the performance of the traders you follow.
 

In addition to choosing the right traders, you also need to have proper risk management strategies in price to maintain your gains. It is a good practice to monitor your copied trades and make necessary adjustments when market conditions change.

Many copy trading platforms permit users to set a maximum loss or assign a certain percentage of their trading account to a single trader. Furthermore, social trading and semi-automated copy trading help you manage your risks effectively.

Is Copy Trading Good For Beginners?

Yes. It enables inexperienced traders to follow some of the most successful traders on the market and learn best trading practices along the way.

Is Copy Trading Profitable?

While copy trading can be a straightforward and rapid method to potentially make money by following other traders' trading ideas and expertise, there are also downsides to consider.

The profitability of copy trading relies on the performance of the traders you choose to follow, and it's important to remember that past success does not guarantee future gains.

Additionally, if the traders you copy make poor decisions, it can lead to losses for your investments. So, while copy trading offers convenience, it also comes with risks that investors should be aware of.

What Is A Popular Copy Trading Platform For Crypto?

eToro is one of the most common platform used to do copy trading. Its the first platform to initiate the concept of copy trading in 2010. 

Currently, it offers a range of social features like an FB-style newsfeed that enables you to engage with other traders directly.

eToro AUS Capital Limited AFSL 491139. eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. See PDS and TMD

What Is Copy Trading on eToro?

eToro provides copy trading features to view and mirror trades executed by veteran investors.

The process is easy - select a trader you wish to copy and then do a few settings in your account to follow their trading moves. You can repeat trades from top-performing traders on this platform.

In addition to copy trading, eToro also gives you a comprehensive social experience, where traders can speculate on prices, discuss their moves, and share important news.

• The largest social trading platform

• Presence in 140 different countries

• Supports copy trading for Contract-For-Differences (CFD), stocks, and Crypto (74 Cryptocurrencies, 19 Fiat Currencies)

• Minimum Deposit: US$50

• Deposit Fees: Variable (conversion fees for non-USD deposits)

• Withdrawal Fees: US$5 (minimum withdrawal of US$50)

• Trading Fees: Variable Overnight and weekend fees apply

• Deposit Methods Allowed: Bank transfer, Debit card, Neteller, PayPal, Online banking, Skrill

• Offers an insurance fund

11. Conclusion

Copy trading offers a straightforward and effective method to enhance your profitability and trading abilities potentially.

By replicating experienced traders' strategies, beginner investors can automate their trades and gain valuable insights into market dynamics. Researching and selecting reputable traders can increase the likelihood of success in online trading.

However, it's also important to acknowledge the negative aspect of copy trading. While it can be beneficial, blindly copying others without understanding their strategies may lead to losses.

Additionally, the market is dynamic, and past performance doesn't guarantee future results. Therefore, cautious and informed decision-making is essential when engaging in copy trading.

If you don't have a copy trading account yet, consider eToro, which is used by many investors in Australia and worldwide. You can create an eToro trading account HERE.

eToro AUS Capital Limited AFSL 491139. eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. See PDS and TMD

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