Copy trading allows traders to copy positions taken by other traders. It developed from automated trading in 2005 and grew in popularity among retail traders.
Best Copy Trading Forex Brokers
- XM, Exception range of assets + negative balance protection.
- Octa, A commission-free broker with a proprietary copy trading service.
- AvaTrade, Highly regulated, choice of fixed or floating spreads.
- FP Markets, ECN trading with leverage up to 1:500.
- FXTM, Best all-around broker with high floating leverage and fast execution.
Best Copy Trading Brokers Comparison
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Regulators | ASIC, CySEC, DFSA, FSC Belize | CySEC, FSCA, MWALI International Services Authority | ASIC, BVI, Central Bank of Ireland, FFAJ, FSCA, KNF, MiFID | ASIC, CMA, CySEC, FSCA | CMA, CySEC, FCA, FSC Mauritius, FSCA |
Year Established | 2009 | 2011 | 2006 | 2005 | 2011 |
Execution Type(s) | Market Maker | Market Maker | Market Maker | ECN/STP | ECN/STP, Market Maker |
Minimum Deposit | |||||
Average Trading Cost EUR/USD | 0.1 pips | 0.9 pips | 0.9 pips | 1.2 pips | 0.1 pips |
Average Trading Cost GBP/USD | 0.2 pips | 1.3 pips | 1.5 pips | 1.4 pips | 0.2 pips |
Average Trading Cost Gold | $0.19 | $0.30 | $0.29 | $0.16 | $0.18 |
Trading Platform(s) | MetaTrader 4, MetaTrader 5, Proprietary platform | MetaTrader 4, MetaTrader 5, Proprietary platform | Other, MetaTrader 4, MetaTrader 5, Proprietary platform, Web-based+ | MetaTrader 4, MetaTrader 5, cTrader, Proprietary platform, Web-based | MetaTrader 4, MetaTrader 5, Proprietary platform |
Islamic Account | |||||
Negative Balance Protection | N/A | N/A | |||
| Visit Website | Visit Website | Visit Website | Visit Website | Visit Website |
XM
In Summary Exception range of assets + negative balance protectionI rank XM among the best Forex copy trading platforms due to its active internal trading community and connectivity to signal providers across the MT4/MT5 trading environment. XM also pays a profit share of up to 50% to signal providers, incentivizing profitable Forex traders to submit their trading strategies.
XM allows algorithmic strategies as signal providers and offers VPS hosting for low-latency 24/5 Forex trading. Cryptocurrency copy trading is also available, where VPS ensures 24/7 trading. Traders in the Ultra Low Standard Account also benefit from competitive Forex spreads from 0.6 pips or $6.00 per 1.0 standard round lot.
Pros & Cons
- Outstanding trading tools and loyalty program
- Low minimum deposit, high leverage*, and competitive trading cost
- Excellent research and education
- Trustworthy and transparent with generous bonuses and incentives
- Inactivity fee
Octa
In Summary A commission-free broker with a proprietary copy trading serviceI rate Octa as one of the best Forex copy trading platforms due to its low fees and fast withdrawal processing time. Traders benefit from commission-free spreads of 0.6 pips or $6.00 per 1.0 standard round lot and an average withdrawal processing time for most withdrawals of 19 minutes. The four-tier Status program lowers trading fees further, and traders get a 50% withdrawable deposit bonus.
Octa presents 300+ liquid trading instruments on MT4 and MT5 for algorithmic traders, while its web based, user-friendly OctaTrader and mobile app present better options for manual and mobile traders. Cryptocurrency deposits and withdrawals are also available.
Pros & Cons
- Quick withdrawals and deposits
- 0% commission and no overnight charges
- Space with personalised trading ideas
- Customer Support 24/7
- Mobile copy trading services available only for Android
AvaTrade
In Summary Highly regulated, choice of fixed or floating spreadsI rank AvaTrade among the best copy trading brokers as it offers a choice of service providers to construct passive copy trading strategies. AvaTrade offers DupliTrade, besides the embedded MT4/MT5 copy trading services, and its in-house developed Ava Social, a copy trading solution despite its name. Traders also benefit from a well-balanced asset selection, including options, ETFs, and cryptocurrencies.
AvaTrade maintains reasonable commission-free Forex costs from 0.9 pips or $9.00 per lot. It also features a high-paying partnership program with 70,000+ registered partners from 150+ countries and $250,000,000+ commission payouts, an added benefit to coy traders and signal providers.
Pros & Cons
- High quality educational offering via AvaAcademy
- Excellent choice of trading platforms catering to various trading needs
- Broad asset selection and cross-asset diversification opportunities
- Well-regulated and trusted broker with oversight from a central bank
- Trading costs competitive but nothing special
FP Markets
In Summary ECN trading with leverage up to 1:500FP Markets developed its proprietary FP Markets copy trading solution, which traders can use to diversify their portfolios alongside embedded copy trading solutions in MT4/MT5/cTrader. Fee-based Signal Start and the well-known Myfxbook Autotrade service are also available. It makes FP Markets one of the best copy trading brokers.
Signal providers get MT4/MT5 upgrades via 12 plugins, Trading Central, and Autochartist, ensuring they have cutting-edge tools for signal creation. FP Markets also maintains a well-balanced asset selection. Traders get competitive, commission-based trading fees featuring raw spreads from 0.0 pips for a commission of $6.00 per 1.0 standard round lot.
Pros & Cons
- Choice of trading platforms and auxiliary trading tools
- Very competitive cost structure and excellent asset selection
- Low minimum deposit requirement and leverage of up to 1:500
- Well-regulated and trustworthy
- Availability of Iress geographically restricted
FXTM
In Summary Best all-around broker with high floating leverage and fast executionFXTM is home to over 2,000,000 traders and offers excellent execution statistics confirmed by Big Four accountancy PricewaterhouseCoopers Limited (PwC). The commission-based cost structure remains one of the most trader-friendly among all brokers, and the Loyalty Program, limited to $10,000, allows active traders to decrease costs further. FXTM Invest caters to copy trading, and FXTM dedicated a guide on how to maximize returns. Education forms a core aspect of FXTM, and it received a Best Education Provider 2020 award. It also provides quality research, expanding its product and services portfolio.
Pros & Cons
- Excellent commission-based Forex pricing environment and transparency
- Upgraded MT4/MT5 trading platforms plus proprietary mobile trading app
- Quality market research and educational content for beginner traders
- A highly regulated broker with a tier-1 license
- No cryptocurrencies and limited choice of commodities
What is Copy Trading?
The sector peaked a decade later, as most realized that it is not as profitable as advertised. Since between 70% to 85% of traders lose money, the majority copies losses. After three years of contractions, copy trading embarked on yet another push higher, especially with the emergence of cryptocurrency trading. Millennial traders pile into copy trading platforms, bypassing necessary Forex education.
Many traders who favor copy trading do so from their mobile devices. Since copy traders do not trade, they do not require the screen space to analyze assets. Copy trading platforms provide performance statistics, operating history, number of copiers, capital following a signal provider, and a risk score. After selecting a trader to copy, copy traders allocate funds to follow the chosen trader. The platform provider will duplicate all actions taken by the signal provider to the copied portfolio, usually proportional to the dedicated capital. Copy traders can stop following a trader or make manual adjustments to the stop loss and take profit levels if desired. Copy trading created a sub-sector of trading, and millennial traders favor the approach, which is not without risks and has failed to deliver consistent results.
Is Copy Trading Legal?
It depends on the jurisdiction, but brokers offer it as a legal service. In 2014, the UK's FCA had the intent to classify copy trading platforms as investment managers.
How Does Copy Trading Work?
Copiers select traders to follow and allocate capital to the strategy. The copy trading platform then copies all actions taken by the trader to the portfolio of the copier.
Copy Trading & Mirror Trading Differences
Both are similar but mirror trading copies the entire strategy without human input or interaction with traders. Copy trading allows copiers to choose traders to copy, adjust copied trades, and provides more freedom overall.
1. Trading Strategies
Mirror trading is more suitable for advanced traders with more substantial portfolios. It can consist of the input of hundreds of traders and covers more macroeconomic data. Copy trading can follow just one trader and is a better approach for individual traders.
2. Trading Volumes
Retail traders transact in significantly smaller volumes than professional ones, making copy trading the right choice. While the former may place trades of 100 units, the latter commences from 10,000 and upwards, requiring more capital.
3. Institutional & Retail Clients
Mirror trading originated in professional trading circles, while copy trading emerged at online brokers catering to retail clients.
Copy Trading Advantages
Copy trading is for individuals who want exposure to financial markets but who lack time to learn how to trade. It is a form of account management, and several regulators investigate the reclassification of copy trading platforms as investment advisors. Copy traders should always monitor their accounts and never trust a strategy blindly.
Copy Trading Risks
Between 70% and 85% of all retail traders lose money, and most copiers copy that performance. Most copy trading platforms have no compensation model for traders or demanding conditions that pressure them for increased performance, leading to long-term losses. Traders may also quit at any time, leaving copiers to scramble for new providers.
Market Liquidity with Copy Trading
Should traders take positions in illiquid assets, volatility can rise and cause unacceptable drawdowns on portfolios. Since copiers have no input, they may get higher risk exposure than desired.
Factors to Consider When Choosing a Copy Trading Broker
I recommend that copy traders consider the items below when researching the best copy trading platforms, or to save time, pick one from our list where we have done the hard work for you.
1. Commissions & Fees
Many brokers increase the spreads or commissions on their copy trading platforms to compensate traders. Others generally have higher fees for their copy trading service. Traders should find a broker that maintains a highly competitive cost structure to increase their profitability.
2. Funding & Withdrawal Methods
Traders should always trade with a broker that offers the funding and withdrawal methods they prefer. Low-cost online payment processors offer the best service for most traders.
3. Customer Support
While most traders never require customer support, copy traders should ensure 24/5 assistance is available, as copy trading platforms may experience issues or copiers need help navigating the options.
4. Comprehensive Trader Resources Offering
Copy trading platforms that offer comprehensive trader resources and trading tools allow traders to achieve better returns. Therefore, copy traders will benefit from a more competitive trading environment.
5. Regulation
Traders should always trade with a regulated broker and ignore unregulated ones, regardless of the offer. There are rare exceptions, but traders must proceed with caution.
Automated Forex Copy Trading
After a copier selects the desired trader or traders and allocates capital to each, the copy trading platform will mirror all trades taken by the trader. The process is 100% automated without the intervention of the copier. It is the most used form of copy trading.
Semi-Automated Copy Trading
Copiers who wish more input will prefer this option. It allows copiers to review all positions of the trader in real-time and choose which ones to copy. Copiers then may either choose to automatically close copied trades or adjust stop loss and take profit levels.
Manual Copy Trading
Copiers who wish to place and manage trades but require trading signals will engage in manual copy trading. Vast resources exist, free and for a fee, and copiers have full control over all aspects of trading.
Tips for Successful Copy Trading
Here are four tips for successful copy trading to ensure copiers get the best outcome.
- Select the right broker - It forms the backbone and safety net for any copy trader. We recommend selecting the right broker for your trading needs with a trustworthy reputation and a trader-friendly cost structure.
- Find the right account - Trading from an account suitable to your capital will allow improved trading results.
- Choose the ideal signal provider - This is the most challenging aspect. We urge traders to research each trader and select one with similar account size.
- Proper settings - Copiers must implement the same settings as the traders they follow. Otherwise, the copied trades may result in losses.
