Q & A
Copy trading means automatically replicating the trade strategies and positions opened by an other traders on your account. For instance, if a trader has bought a certain share CFDs at £145.50 with a take profit order at £148.40 and stop-loss at $144.10, you could automatically copy this trade and open it in your account. The copy trading software will let you customize this trade by adjusting the trading amount and stop-loss levels. However, you should understand the associated risks before you start copying other traders.
Yes, copy trading is legal in the UK. However you should be aware that the person whose trades you are copying doesn’t have any obligation to think about what is best for you.
A wealth manager is a regulated and authorized person who has a lot of responsibility for what happens to your money. Though they cannot guarantee that you won’t lose money, they have a regulatory responsibility to understand your needs and consider what is in your best interests.
With copy trading you are copying the trades of another person. They will not be regulated themselves and they will have no regulatory responsibilities to you – at all.
There is no standard amount on how much you can make copy trading in the UK. It will be massively dependent on such factors as the other trader’s win rate, how much risk the trader (and therefore you!) takes, frequency of trading, the trade amounts, instruments traded, trading fees, and markets in which you trade.
It is important to note here that profits are not guaranteed, and any past performance is not a guarantee for future returns. By copying someone’s trades you can take on significant risk and the potential for loss is great.
As with all investing, your capital is at risk. Do not invest more than you can afford to lose. Speak to a financial adviser if you are unsure about whether to invest or not.