What is copy trading?

Copy trading is an investment strategy that allows individuals to automatically replicate the positions opened and managed by other traders. When a lead trader executes a buy or sell order, the same trade is mirrored in the follower's account. The amount invested by the follower is typically proportional to the capital allocated to the copy trading setup. Platforms facilitate this process by connecting investors with experienced traders. Followers can browse performance statistics, risk scores, and asset preferences before deciding whom to copy. Some platforms require a minimum investment, often ranging from $100 to $500, to begin copying a specific portfolio. This method allows beginners to access financial markets without needing deep technical knowledge. However, copy trading carries significant financial risk. Past performance of a lead trader does not guarantee future results. If a lead trader incurs losses, the follower experiences those same losses in their account. Market volatility and slippage can also affect execution prices. Investors should only allocate capital they can afford to lose and remain aware that trading involves risk, including the potential loss of the entire invested amount.