In the past year, several of the top Forex brokers have introduced the concept of social Forex trading. The idea is simple: the best Forex traders share their trades with the community, and other traders are free to copy their trading strategies. This is a new idea and one that allows novice Forex traders to learn from Forex experts.
Many of the best social Forex brokers allow you to search for traders to copy based on profit, risk level and the number of other traders who copy a Forex trading expert. This makes it easy to find popular Forex traders to copy, but there are a few things to consider when copying a Forex trader.
- Popular doesn’t always mean best. Most brokers allow you to see how many people are copying Forex Expert. However, the number of copiers alone does not necessarily indicate a strong marketer. Many times consumers will flock to a trader after he has made one trade with big profits, hoping to score again. A marketer may have thousands of followers, but that doesn’t mean followers earn money.
- Don’t copy a Forex trader just because of the big returns. Just like a trader’s popularity, a trader’s Forex trading results can be a bit misleading if not read correctly. One of the most popular Forex brokers has dozens of traders whose statistics reflect 300% profit from Forex trading. This is an amazing number, but you need to consider the number of trades and the amount of capital you are risking to earn these profits. If you don’t have a large trading account, you may not be able to survive the grind that occurred on the way to those big Forex profits.
- Check the risk profile. Most leading social Forex brokers will offer some type of trader risk measurement. While many of the high risk Forex traders manage to secure large profits, the strategies used may not work for all traders. Beginner Forex traders, in particular, should copy traders with lower levels of risk so that one trade does not put their entire account at risk.
- Diversify! Don’t risk your entire Forex trading account copying a single trader. Instead, choose several different traders and spread your money between them. This will reduce your overall risk as only a portion of your account will be at risk if a trader engages in a risky trade. Yes, you may miss out on a great trading opportunity every now and then, but consistent Forex profits are the goal.
If you keep these ideas in mind, you will have a much better chance of successfully copying other Forex traders. Social Forex trading programs are a great way to start trading Forex, reducing risk while new traders learn the Forex market. However, there is still risk and traders should be wise in their decisions when choosing traders to copy.