Trading Strategies for Beginners – Copy, Social, and Mirror Trading

Financial markets offer hundreds of opportunities to invest and make money, including high-risk, high-return securities, stables, and volatile and fluctuating instruments. These tradable assets can be utilised by a variety of trading strategies.

You can get into the trading market and try out different strategies to find out which one works for you and brings you the highest returns. However, this may take you a long time and more money.

Nowadays, new traders follow the steps of successful traders to copy what they do, hoping to get similar results. If you are new to the trading world, you can start with copy, social, and mirror strategies, which we will explain thoroughly as the following.

Social vs. Copy vs. Mirror Trading Strategies

These trading strategies help you get ahead in trading by saving months or even years of trial and error, wasting more money and losing your capital in practising. Well, learning by doing is not wrong at all, but you can combine it with strategies that have proven success history.

Social Trading

You can start by joining financial market communities on social media and listening to the advice of market experts or professionals who have been trading for years. This approach is good for rookies to engage in discussions and debates about trading ideas, newly emerging markets or trending investments.

This way, you can shape your trading strategy alongside other investors in the market. You can also share your plan with community members and listen to recommendations and critics to adjust your strategy.

You can find Forex trading communities or investors who engage in stock trading, commodities, bonds, cryptos, and more asset classes.

Copy Trading

Copy trading entails the direct application of expert strategies on your trading platform, including assets, signals, markets, and other order execution details. 

Advanced trading platforms allow you to copy strategies of market gurus with expected success rates of each approach and the suitable instruments that have a higher chance of success.

You can follow the strategy directly and activate it in your trader’s room or alter it slightly to your preference. Thus, it is a flexible approach where you can get insights from professional traders directly on your strategy while adjusting it to suit your budget, risk tolerance or preferred securities. 

Mirror Trading

Mirroring a strategy means entirely copying and automating your trading platforms according to a chosen strategy. This includes using similar securities, entry and exit plans, risk levels and tools.

These strategies have proven to be successful at some point and are aligned with the belief that market cycles repeat themselves, and when you apply the strategy, you are more likely to land some gains.

Mirror trading strategy is useful if you have little or no time to monitor your trading platform or if you are engaging in different asset classes and it is difficult for you to track every portfolio simultaneously.

Which Strategy is The Best?

Choosing the right strategy depends totally on your preference, budget, expectations and risk tolerance. Therefore, let’s review the advantages of each strategy.

Advantages of Social Trading

Social trading is good for newbies who want to listen to real-time advice and engage in discussions. This way, they can learn and nurture constructive criticism of their tactics or strategies.

This also allows traders to build a network of likely-minded investors and potentially grow their connections to include market influencers and receive some exclusive market news and updates.

However, the downside of this approach is that not every community member is a certified professional, and some of their recommendations may be invalid.

Advantages of Copy Trading

The Copy trading strategy is good for rookie and intermediate traders who have some knowledge about how markets work but lack practical experience in building trading strategies. Therefore, they can copy expert strategies as a starting point and enhance them to suit their preference and capital.

This approach is suitable for traders who want to automate part of their trading activities while learning and improving continuously.

The disadvantage of this strategy is that what worked well with other traders may not necessarily work with you because of different scenarios, inputs and timelines. Therefore, monitoring your automated trades and interfering closely whenever required is crucial.

Advantages of Mirror Trading

This strategy works well for traders who manage multiple portfolios at the same time or have limited time to keep up with what’s going on in the market. Therefore, an investor may choose the trading model from the platform, set the conditions and course of action, and fully automate the process.

The major disadvantage of this approach is that wealthy investors have different risk tolerance than the average retail trader. Therefore, you may incur excessive losses that your capital cannot afford, and your trading position may be closed in no time.

Conclusion

Copy, social, and mirror trading strategies are known for shortening the learning curve and saving years of testing the market. Therefore, they are popular among new investors who lack knowledge of trading strategies. 

This approach has proven successful at some point, and many investors still use this method. However, it is important to incorporate learning and improving your strategies to make the right call whenever your interference is needed.