How beneficial a strategy is Mirror Trading in the Forex Market?
As a Forex trader or investor, you might have had come across the term ‘mirror trading’. Successful forex investors have prominently used mirror trading to earn profits. It has been a common strategy since the early 2000s and has integrated into a larger industry in recent years. Across corporate sectors, it has been adapted into similar methods that go by names like social trading and copy trading.
However, as vital and profitable Mirror Trading sounds, what does it actually mean?
Mirror trading as a trade selection strategy is hugely employed in the Forex trading grounds. It involves a trader setting profitable trading strategies, which are later adapted or copied by other investors to implement to their accounts. Thus, experienced traders can make their trading strategies available to institutional clients or retail investors in real-time. In addition, it can be immensely beneficial to amateur traders and those new to online forex trading.
How does the Mirror Trading Work?
Mirror Trading is based on an automated response system and can guide new traders or investors against potentially harmful or unnecessary trading decisions. New or inexperienced traders are prone to emotion-based marketing and trading decisions, which lack precision. They can access the knowledge of the market or trading strategies on mirror trading platforms like FXCM, AvaTrade, Dukascopy and MetaTrader 4 (MT4).
These trading platforms help amateur forex traders examine histories of trading strategies and stock market values. They can also seek help from brokerage services or third-party sites to research the performance and potency of these strategies before using them for mirror trading. Mirror trading platforms can also analyze the algorithmic trading strategies for other aspects like investment assets and goals, market options and risks associated. An experienced trader or a strategy developer collaborating with mirror trading platforms can share their strategies or trading options, which are automatically shared among mirror traders and clients, and are duplicated to their accounts. The Mirror Trading Platforms work with the purpose of replicating successful trading results and help new traders gain experience in this field.
Benefits of Mirror Trading
- As it is an automated response reflected directly on the trader’s account, it helps traders against rash or emotion-based decisions. Using Mirror Trading, Traders and investors can emotionally detach themselves from the decision-making process, reducing the risks of running a loss or making unnecessary decisions.
- Helps new traders understand various trading strategies from experienced traders and set trade parameters to avoid overtrading.
- As Mirror Trading Platforms automatically reads the trade market conditions and implements profitable strategies, there is no need for experts to analyze the market painstakingly. Therefore, it saves up in terms of time and resources, which can be judiciously utilized.
- Mirror Trading cuts down the chances of running into risks as it operates on failsafe algorithms and verified results. In addition, the platform functions on strategies validated by multiple experienced traders, filtering out possible loose ends.
Disadvantages of Mirror Marketing
- Though Mirror Marketing has started to take off, it is not readily available across the world. Most Mirror Marketing Platforms have their servers based on the US Trading market. So, US-based traders can find this system accessible, but the Mirror Marketing strategies might face limitations in other trading markets.
- As trading market software generates automated responses and directs them to traders’ accounts, they can also mirror faulty strategies and losses if left unsupervised.
Mirror Trading for beginners
If you want to get started with mirror trading, here are a few steps to help you with the process:
- Register your trading account to a trading broker with Mirror Trading services, like eToro or Binance. Make sure the broker you choose has an easily accessible customer support and fast transactions.
- Most brokers operate over third-party websites or programs like MetaTrader 4, so make sure you have downloaded and logged into the appropriate program or website.
- To begin mirror trading, select a trading strategy. The trading platform will assist you in making a selection without any emotional element holding you back.
- Make sure you have pre-determined risk boundaries. Unchecked risk boundaries and overtrading can cause you to incur losses. However, with some supervision, you can expect successful results in Mirror Trading.
Though trading does not always yield the best outcomes, it is vital to streamline your strategies without losing hope. Mirror Trading can be highly beneficial in this regard; it is a legal strategy that amateur traders can effectively employ and can be a great starting point for newcomers in the vast world of Forex Trading.