One of the first things to do when you are just getting started with forex trading is mastering the basics. It is essential for every trader to understand how to read and interpret technical and fundamental signals. Mastering these basics grants you – the trader – access to more advanced strategies that you can develop to suit your trading style.
Naturally, taking that next step and learning about advanced strategies take time. Not all traders have the time and energy to invest in perfecting their trading strategies. Mirror trading and copy trading are the popular solutions to this roadblock. What are they and which one should you be doing?
Mirror Trading: The Automated Approach
Mirror trading, as the name suggests, is when you mirror the trading strategy of other traders. I said, other traders, because companies that offer mirror trading combine the strategies of their top traders to produce reliable and accurate signals for their consumers.
Today, mirror trading is a lot more sophisticated. The strategy may be old, but it has been improved with the help of big data and artificial intelligence. As a result, mirror trading signals are relatively accurate and predictable; they are perfect for investors who want a hands-off forex trading experience.
The only downside to mirror trading is the fact that you have to mirror everything. You can’t pick and choose the signals you want to follow; in fact, the whole process is fully automated. Traders must also install a proprietary software or a MetaTrader plugin to enable automated mirror trading.
Copy Trading: Follow the Best Traders
Copy trading is a refinement of mirror trading. Unlike mirror trading, which obliges you to follow every signal without any human input, copy trading lets you choose the specific trader whose trades you want to copy. When that trader opens a position, your trading account will follow suit.
Copy trading remains fully automated, but you can choose to follow different traders at different times. You also have the option to follow multiple traders (i.e. for different currency pairs) depending on the support of the platform.
Following the best traders also allow you to learn more about their trading strategies. You can observe all open positions in real-time and try to understand the reasoning behind every trading decision.
Social Trading: The Future
The trading approach I actually recommend is social trading. It is the perfect mixture between mirror and copy trading and the social aspect of trading itself. Instead of relying on automated signals and plugins, you can join a trading community such as https://investingoal.com/ and discuss market updates in real-time.
If you are a relatively new forex investor, social trading presents the perfect opportunity to learn. You don’t have to guess the technical and fundamental reasons for the trades you make. Instead, you have a group of experienced traders with whom you can discuss the market and make trading decisions together.
Social trading is also relatively safe for one particular reason: you make every decision yourself. The signals and insights you get from the trading group or forum act only as guidance and trading aids. You will master advanced trading strategies much faster this way.
FREE related content from StrategyDriven