The pros and cons of copy trading

Following the COVID-19 pandemic, there has been a noticeable shift in the way people trade stocks, especially among retail investors. This shift was characterised as herd mentality or herding behaviour: novice traders followed the crowd and imitated the actions of others in the stock market.

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This is where copy trading comes in.

How does copy trading work

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Copy trading allows both beginners and experienced traders to copy the trades of successful traders in the hope of benefiting from other traders' experience and potentially making profitable trades.

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However, it is important to understand that copy trading, like any financial strategy, has its advantages and disadvantages.

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Advantages of copy trading

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Disadvantages of copy trading

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In conclusion, it is crucial for individuals considering copy trading to carefully weigh these pros and cons. It is prudent to consider one's individual risk tolerance, investment objectives, and level of trading knowledge before embarking on a copy trading strategy. Open a Deriv Trader demo account to practice copy trading with a $10,000 virtual money.