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Binary options copy trading is easy right? All you have to do is pick a winner and make a million? Copy trading is actually potentially one of the riskiest things you can do with binary options. Especially if you approach it with the wrong frame of mind. Believe it or not, it is not as easy as it sounds and it does take some strategy.
Assuming of course you have chosen a good platform. There are dozens of available platforms, many of them little more than gimmicks to attract traders. One platform we can recommend is Signal Hive which was voted best binary options signals provider for , and Another alternative to binary options copy trading, is the social trading network eToro.
They offer traders the ability to copy other traders, but do not offer binary or digital trades. Below is a video explaining the concept:. Copy trading is just like any other kind of trading; you have to spread your risk around. Blindly copying is not the way to go. For this reason alone it is a smart idea to follow more than one trader but there is still risk in that.
This way you are diversified in two ways;. When looking for a trader to follow build a list of possibilities for each asset. If you were the coach of a football team you would want to have a first string and second string right?
The same idea applies here. When this happens its time to rotate them out of your portfolio and rotate in a fresh trader. When choosing assets try to avoid unwanted correlations. Correlations are when two assets are affected by the same catalysts. It is impossible to avoid all correlations, the market is intricately entwined, but you can avoid obvious ones. The reason is simple; it defeats the purpose of diversification. My suggestion is for a copy portfolio to look something like this;.
The final tip and perhaps the most important is to manage your trades and your traders. Use the risk controls provided by the platform, they are there for a reason. If not, even with a great platform and a good trader, you could come back to find your account wiped out.
Copy trading via a robot increases risk. Automated trading means you lose complete control of your trading. There are risk management tools that can be put in place — for example limiting total losses, or the number of losses in a row.
It is vital these tools are used. If the service does not offer them, look elsewhere. Copy trading is OK. The first line of defence is picking the best platform.
The next step is to actively copy trade and the above tips can help. Take control of your trading and be successful.
If you learn something along the way even better. As the biggest social network, they have the largest number of active traders. There are a huge range of traders, trading all sorts of assets. These allow traders to copy an entire fund — the fund might be made up of assets, or indeed of traders who trade certain assets. Risk management is also built in to the eToro platform with risk scores for every trader, and numerous settings that help copy traders control the amount of risk they expose themselves too.
Below is an area where you can search the eToro network for traders. Use the filters to narrow down the traders you are interested in:. The last filter is an important consideration. Many traders can show a profit over a short period, but those that show consistent profit over the long term offer a safer investment, but perhaps a lower gain. There is also an advanced filter to make the search even more selective.
Once you find a list of traders that you are interested in, you can click on them to drill into the detail of their trading — how often they trade, monthly performance and whether they are currently active for example. You can also see their current trades. Some Tips For Copy Trading Success Copy trading is actually potentially one of the riskiest things you can do with binary options.
Below is a video explaining the concept: