Mirror trading is among the increasingly popular trading strategies for Forex trading and stock traders. It is a method that allows traders to select a strategy, trading platform, and automatically mirror the trades. Therefore, the traders don't have to work much.
As a trader, it is arduous to come up with successful strategies and techniques. By being a mirror trader, you can copy the trades of the most successful investors and implement them in the same trade which is known as copy trading. Everything happens in real-time. That's why it has become one of the most sought out strategies in the trading world.
Contents
- How Legitimate Mirror Trading works
- Making Profits By Mirror Trading
- Tips for Mirror Trading
- Mirror Trading in Money Laundering
- Why Use Mirror Trading
- Disadvantages of Mirror Trading
- Mirror Trading International Platforms
- Conclusion
How Legitimate Mirror Trading Works
The Forex trading market has multiplied over the years. It's one of the biggest markets in the globe right now. If you want to be a mirror trader, you need to put in some effort. You need to gain knowledge and experience about this trading platform. But still, it's not enough. There will always be risks if you become a mirror trader.
So, the safest bet is to follow the footprints of successful traders and incorporate their strategies. This is the basis of mirror trading. Many strategy developers create and constantly improve the trading techniques.
As a retail trader, you will hold accounts at different brokerage institutions. This is where you can choose to connect your account with successful strategy developers. Therefore, when they place a trading order, your account executes the same order in real-time in your brokerage account.
There are tons of experienced traders you can choose to connect with. Mirror Traders usually select a trader who matches their assets. Other types of mirror trading involve more advanced features like a bot.
Making Profits By Mirror Trading
The best part about trading mirror is that anyone can profit no matter how much money or experience you have. All you need to do is invest and let the system do its magic.
Mirror trading is profitable as even beginners with no prior experience can try it out. Mimicking and implementing successful trader strategies increases your probability to profit more. It is a much faster trade system which will also save you time.
Anyone can make cash with mirror trading, as it opens the doors of trading to everyone, regardless of how much time you have or how much experience you have. Just deposit the money you want to invest, and the system will do the rest for you automatically. You can also make passive income from it.
Tips for Mirror Trading
Having our two cents on mirror trading would surely help you make better decisions. So, here are our tips for you for mirror trading.
1. Selection of Trading Strategy
This is one of the main aspects you should look out for. Many platforms will offer a wide variety of strategies. Among them, only a handful will be efficient. It's best not to start without having any rudimentary idea about it.
As a trader, you need to prioritize your needs and your goals. After deciding, you can choose a pre-existing strategy that best suits you.
2. Having Multiple Strategies
What if the strategy you chose underperforms in the market? Then all your assets would be in jeopardy. To avoid such cases, it's better to select multiple systems. Therefore, your investment will be much safer.
3. Effective Leverage Ratio in Forex Market
In mirror trading, low leverage will give you a much better return compared to low leverages. Also, it dramatically decreases the probability of a market crash. Therefore, it's wise to choose a strategy that has low leverage. A ratio of 5:1 is preferable.
4. Risk Management Plan
The trading market fluctuates in less than a millisecond. One moment the market moves up, and the next, it goes down. Therefore, you can never predict what's going to happen next. That's why it's preferable to have a risk management plan so that you can pull the plug when it's needed.
Mirror Trading in Money Laundering
Although most traders use legitimate mirror trading, there are times when mirror trading is used in money laundering. Money laundering means acquiring legal status to an object that is gained through illegal means. Now mirror trading has caught the attention of people by appearing on news headlines of money laundering cases.
To process such a scheme, a client opens up a trading account. Then, he deposits some amount in his brokerage account. After that, he uses his money to buy securities like rubles which are then passed to different parties and sent to other countries.
Finally, it channels through different points and gets deposited to a Deutsche bank account owned by the client. Therefore, the money which was obtained by criminal means turns white.
Why Use Mirror Trading
If you're not convinced by now, we'll discuss more on why you should use mirror trading.
1. Reducing Emotions
Making trading decisions is stressful. You have to monitor the market at all times and check the performance. Rather than doing this arduous task, let the mirror trading system determine when a trade will open, amend, or close.
You can sit back and see the performance of the trade at the end of the week. If the performance is satisfactory, you can keep using the strategy, otherwise, choose a new one.
2. Low Effort and Cost
You don't have to put much effort when you use mirror trading. You don't need to go through rigorous training or study for weeks. All you need to do is mirror the right trader, and your work is done. If you want your portfolio to run in the same way as a successful trader, the cost is lower than traditional brokers.
3. Save Time
Being a stockbroker can be tedious. You have to follow the news and see which can affect the future of your assets. You also have to be glued to your computer to decide what to buy or what to sell. This can hamper your social life. Being a mirror trader, you can profit while saving tons of time.
Disadvantages of Mirror Trading
Just everything else in the world, mirror trading involves having some disadvantages as well that a mirror trader faces. What are they? Let's find out!
1. Robustness of Strategies
There are mirror trading strategy descriptions that will give you good results only under certain conditions. They won't ensure success. A good example can be that a system can perform well when the market is going well while underperforming in other range-bound markets.
2. Risk Assessment
You can easily see and monitor how your portfolio is performing in stock markets. If you generate profit, you can quickly check it out. But with mirror trading, it's difficult to see the risks taken to make the total profit.
3. Control of Portfolio
This one is a no-brainer. As you are mimicking the strategies of others, it means you will not be in control of your positions. Though this can be beneficial sometimes, it can also backfire. As a trader, you will be putting more trust in the algorithm and the trader rather than your personal trading preferences.
Mirror Trading International Platforms
There are a lot of platforms or software you can choose from that offer mirror trading for informational purposes to a global extent. Tradency is a platform with such objectives. It is an innovative platform that provides a detailed summary of all your strategies' performance. This helps you make more wise decisions.
The platform has strategy filters to choose the best ones with minimum investment. It is an easy tool that you can use for long-term investment purposes as well. That's why it has become a leading platform that offers mirror trading and copy trading.
Conclusion
Mirror trading has opened numerous possibilities in the trading world. Trading has now become fast, easy and safe. Even beginners can try out their luck with this method. Although it cannot guarantee the most satisfactory outcomes, it can undoubtedly assist you in becoming a good trader.
