Understand what is being copied

Copy trading can reproduce another account’s positions or trading decisions. That does not transfer the other trader’s risk tolerance to you, and your executions can differ because of timing, account size and instrument availability. A profitable historical record is not a forecast.

Sources: [1]

Look beyond the return chart

Inspect the largest historical drawdown, leverage, open positions, track-record length and dependence on a small number of trades. Check how the service handles instruments unavailable in your account. Understand what happens when you pause copying or withdraw funds.

Sources: [2]

Read fees and controls together

Add provider charges, performance fees where applicable and the underlying brokerage costs. Test allocation limits and the ability to stop copying. Verify the broker or service authorisation with the relevant regulator. Avoid treating copying as passive income with a predictable return.

Sources: [1]

Sources

  1. ASIC Moneysmart: contracts for difference ↗
  2. FCA: checking an investment firm ↗

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