copy trading essentials - amazon s3 · trading forex, otherwise no one would do it. it takes time,...

What is it?How does it work?Is it the right choice for you

MICHAEL HODGES AND BRETT COOPER

COPY TRADING ESSENTIALS

www.howtocopytradeforex.com 2

First published as an ebook in 2013 by Decal Pty LtdPO Box 1672, Preston South Vic 3072

© Brett Cooper and Michael Hodges 2015The moral rights for this author have been asserted.

All rights reserved. Except as permitted under the Australian Copyright Act 1968 (for example, a fair dealing for the purposes of study, research, criticism or review), no part of this book may be reproduced, stored in a retrieval system, communicated or transmitted in any form or by any means with the prior written permission. All enquiries should be made to the publisher t the address above.

DisclaimerThe material in this publication is of the nature of general comment only, and does not represent professional advice. It is not intended to provide specific guidance for particular circumstances and it should not be relied on as the basis for any decision to take action or not take action on any matter which is covered. Readers should obtain professional advice where appropriate, before making any such decision. To the maximum extent permitted by law, the authors and publisher disclaim all responsibility and liability to any person, arising directly or indirectly from any person taking action based on the information in the publication.

http://www.howtocopytradeforex.com/

CONTENTS

INTRODUCTION TO FOREX AND COPY TRADING .................. 7

What Is Forex ............................................................................................................................ 8

The difference between trading and investing ......................................................... 9

The rise of copy trading .................................................................................................... 10

WHAT IS COPY TRADING? ............................................................. 11

What is copy trading .......................................................................................................... 12

RISKS AND REWARDS OF COPY TRADING .............................. 18

HOW TO PICK THE RIGHT SERVICE ............................................ 21

What Is Best For Me ............................................................................................................ 22

How Does It Work ................................................................................................................ 23

Is Your Account Right For The Master Account ...................................................... 24

Check The Data ..................................................................................................................... 24

Check The Reviews .............................................................................................................. 26

CONCLUSIONS .................................................................................. 27

Is Copy Trading A Scam? ................................................................................................... 28

Paid Services .......................................................................................................................... 28

How To Get The Most From Copy Trading ................................................................ 29

Putting it into Practice: ...................................................................................................... 30

How to Use the Trend Line Method in Copy Trading ........................................... 33

How to Protect Your Profits Using the Higher Lows Method ........................... 37

All Broker are not the Same ............................................................................................. 39

CHAPTER ONE

CHAPTER TWO

CHAPTER THREE

CHAPTER FOUR

CHAPTER FIVE

www.howtocopytradeforex.com

This is your first step in navigating

the world of Forex copy trading.

As a member of the Forex Copy

Trading Survival Guide you will learn

the secrets to gaining up to 10%

with little risk. This ebook lays the

foundations you will need in order

to build a successful copy trading

portfolio. Use the check list and free

bonus Forex trading ebooks to profit

from international currency trading.


www.howtocopytradeforex.com Copy Trading Essentials 5



PREFACEFirst up a big welcome to the World of Forex Copy Trading. It doesn’t matter whether this is your first time trading in Forex or if you are like me and have given it a go before and never quite did as well as you thought you were going to do.

I gave trading a red hot go for over 5 years, with out any great success, I was very strict with my Stop Loss setting so never have too many huge losses, just heaps of little ones. Ever heard the saying “death by a thousand cuts”, I could never turn it around to a winning outcome. Add in the thousands of dollars I spent for one-on-one coaching, software, loss of sleep plus the loss of income I could have earned from my day job and it all adds up to a tidy sum.

I discovered Copy Trading a little while back but found absolutely no information on how it works and more importantly on how to make it work for me. After careful consideration I decided to make this ebook along with Michael to help guide other Traders like yourself, traders wanting to get ahead in life and maybe help reduce the struggle of making a profit from Forex Trading. This book will give you an understanding of what copy trading options are out there, and the confidence that you can pick the good traders to follow from the bad ones.

If at any time you have any questions please do not hesitate to drop me message from the help page on the web site. Please remember all forms of trading involve risk. Copy Trading in Forex is no different. It’s very risky. Only invest funds, that if lost, would not affect your lifestyle or cause financial hardship.



CHAPTER ONE:

Introduction To Forex And Copy Trading


What Is ForexForex, or Foreign Exchange, refers to the use of currency as a trading or investing vehicle. Currency has been traded for centuries, as one nations coin was more valuable than another. Today currency can be traded directly by physically buying or selling foreign currency at a bank or through a broker. It can also be traded indirectly with a variety of derivative instruments like futures, options and spot Forex. In any case the purpose is to capture changes in the valuations of currencies relative to each other in a profitable manner.

In the past foreign exchange was more stable. Currency values fluctuated some but because most money was gold and silver, or based on gold and silver, it did not fluctuate very much. Ever since the U.S. and other world governments abandoned the gold standard things have been different. Now government policy and the actions of the worlds central banks have a lot to do with the value of money. Each day economic events, policy changes and even random bits of news have the power to cause large moves in the value of different currencies.

One of the biggest differences in currency trading between then and now is leverage. Today it is possible to leverage your account many times its actual value. This allows you to reap huge reward for little risk. The bad news is that leverage is a double-edged sword and cuts both ways. Losses are just as levered as profits and can produce huge debts that can grow larger than the original account. It is possible to make money trading Forex, otherwise no one would do it. It takes time, skill, education and patience to be profitable long term and not everyone can combine all those traits.

There are several reasons why trading Forex is better than stocks, futures or indexes. In the Forex world there are really only 4 important pairs you need to watch. This is compared to thousands of stocks, dozens of global indexes and commodities. Forex trades 24 hours a day and is subject to very little regulation. The are also no commissions, no middle men and instant execution of trades. Learn from my experience and discover how you can lock in profits with this lucrative form of investing.

One of the

biggest differences

in currency trading

between then and

now is leverage.



The difference between trading and investingContrary to popular belief there is a huge difference between trading and investing. For one thing there is the time scale. Investing is a long term proposition based on a plan intended to minimize risk and produce steady gains. Trading is short term, carries much greater risk and is also meant to produce steady gains.

Investing- Investing and investment are the ideas of putting money into something and making a gain over time. This is similar to the economic principal of savings. Savings are money meant for the future, they are put into safe places and left alone. Investments do involve some risks but they are limited when compared to trading, speculating and gambling. In terms of Forex, investing is the practice of capturing long term trends and ignoring the day to day fluctuations caused by the noise and chatter of the market.

Trading - Trading is much different from investing. Many of the mechanics are the same, its the practice where the big difference lay. Trading involves buying and selling foreign exchange positions on a short term basis, sometime intra-day, sometimes day-to-day. Trading tries to capture the daily fluctuations in currency values that investing seeks to weed out. Trading is much riskier than investing and is not suitable to all investors. Without the proper approach trading can turn into gambling, causing immense losses that could equal more than the original investment.

Speculating - Speculating, or speculation, is defined as the practice of trying to capture the short and mid-term fluctuations in an assets price. The purpose is to profit from the movement of the asset and not from its underlying or intrinsic value. This sounds a lot like trading and it is but this definition does not take into account the difference in perspective. Traders may educated or not, have knowledge of the market or not or be gamblers, investors or speculators. Speculators are an important and knowledgeable sector

Contrary to

popular belief

there is a huge

difference

between trading

and investing.


of the market. They utilize a wide variety of fundamental and technical analysis tools to make educated decisions about markets and market directions. They absorb excess volatility and risk while providing extra liquidity.

The rise of copy tradingThe attraction of profits provided by Forex trading combined with the difficulty of accurately and profitably speculating them has led to the rise of copy trading. Copy trading is a service provided by a new host of online Forex based businesses. Copy trading is related to the newsletter/adviser/trade-tip industry but also a league apart. Copy trading, in its many forms, is the act of following another trader’s trading automatically in your account. Usually this means linking your account to the traders account of your choice so that all the trades the trader makes is copied into your account. Sounds pretty good right? It all depends on what service you choose and how successful your chosen trader is. Just like other financial websites I see all over the internet copy trading comes with this caveat; “past performance is no guarantee of future results.” Trading, and copy trading, comes with high risk and can result in loss. I know from experience, let that experience guide you to profits using copy trading


www.howtocopytradeforex.com Forex Copy Trading Survival Guide 11

CHAPTER TWO:

What Is Copy Trading?



Copy trading, also know as mirror trading, is an off shoot of the automated trading world and part of the growing social trading scene. Automated trading and algorithmic trading seek to take the burden of trade decisions off the shoulders of the average investor and relies on computer generated signals to automatically place trades in investor accounts. Social trading seeks to build community so that traders can follow and learn from each other. Copy trading is similar to both; it relies on real people executing their own proven strategies and allows others to automatically follow those trades.

What is copy tradingCopy trading began to emerge in the early 2000’s when online Forex trading began to gain mass appeal. It started with a few independent traders and businesses. These first copy trading services utilized special agreements with Forex brokers to create large “Master Accounts” so that other traders could link to them. Once linked and funded all trades made by the Master Account were also made by each individual account linked to it. Since then the industry has evolved, now you can find specialized brokers and services combining copy trading accounts with their other services. It seems reasonable that an inexperienced trader or investor would seek out a more experienced trader, copy trading takes that to a whole new level.

Leader board - The name leader board may be at least a little self explanatory. A leader board is a listing of current traders, ranked by success. The top traders are at the top of the leader board and the worst are on the bottom. Leader boards allow users to set up accounts and follow other traders accounts or attempt to trade on your own. If you are successful and rise to the top of the leader board then other traders may choose to follow you. The best leader boards will allow you to filter trades by best of the day, week, or month. Users are ranked by number of winning

Copy trading,

also know as

mirror trading,

is an off shoot of

the automated

trading world

and part of the

growing social

trading scene.



trades, trade percent, total gains and a number of other factors. You can follow as many traders as you like, pick which trades you want to make and even set up automated copy trading with some accounts. Leader boards are usually associated with one trading platform or platforms so it will be necessary to open an account with both websites.

Signaltrader.comTradeo.comeToro.comZulutrade.comIronfx.com

The Etoro Leader Board.

Accounts with a high maximum draw down should be avoided

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http://www.howtocopytradeforex.com/etoro-ebook

http://www.howtocopytradeforex.com/zulu1

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Social Trading - Social trading includes the traditional leader board and much more. Leader boards are set up by independent companies or even by platform providers and usually populated with known, successful traders. Users can select from the list and choose to follow whomever they wish. Social trading is exactly the same except that anyone can sign up and begin posting trades and tips. Not only is there a log of trades there is also usually a forum associated so traders can pose questions, comment on others trades and utilize the trading community. Results and standings are tracked in much the same way as a more traditional leader board and display the most successful traders at the top. Social trading allows traders of all skill levels to share and discuss trading ideas while also providing a potentially valuable copy trading signal service.

Signal Service Providers - Signal Service Providers are the modern form of the original copy trading services. These services provide signals on a daily and weekly basis and usually come with a guarantee of success. Signal services are usually delivered through emails, texts, sms, phone calls and sometimes even automated trading. One drawback of the signal service provider is that it will come with a cost. Other forms of copy trading are free, SSP’s can cost anywhere from $50-$500 per month or more depending on which one you choose. Signal Services can also be broken down into a couple of different categories based on how they generate their signals. The main three would be news/fundamental, technical and general. The news/fundamental services will provide signals centered around news releases and fundamental aspects of the currency pairs. Technical services will generate signals based on technical analysis systems. SSP’s that utilize technical analysis usually have a proprietary system or systems they use. The last category, general, will provide a variety of signals based on different types of analysis. One bonus that comes with an SSP you won’t get with a leader board is personalized service. There will be someone you can talk to whose purpose is to help you execute the trades correctly.



Forex Brokers - Forex brokers are another source for copy trading. Some of the leading Forex brokers have discovered the attraction and value of copy trading services and are adding it to their own list of services. Some, but not all, platform providers have some form of copy trading. Usually it is a leader board of some sort. Spotware is one Forex technology company that is adding copy trading platform solutions to its list of services called CTrader. Spotware has taken the idea of copy trading to a whole new level. This provider allows other platforms and third party copy trading services and signal services to integrate with CTrader. Other platforms have actually taken a whole different stance and banned copy trading from their platforms all together.

Coaches/Mentors - Coaches and mentors are not specifically copy trading but do offer a similar service. Rather than telling you what to trade, taking the burden of analysis off your shoulders, coaches and mentors will teach you to trade for yourself. A really good coach will help guide you to the right analysis and also help lead you toward making the right decisions for your trades. Coaches and mentors are really a step above true copy trading but are also the most expensive form of trading education. The problem with coaches and mentors is that in the end you still must have the right personality to be successful.

http://www.leaprate.com/forex-industry-news/entry/spotware-introduces-new-copy-trading-platform-cmulti-for-ctrader.html


There are some real benefits to copy trading. It relieves the burden of research, brokerage fees and some risk. It also helps to knock down the traditional barriers to trading such as nationality, race, sex, education and wealth. This new approach to the financial markets is revolutionizing the global investment world and is here to stay. There are several good websites out the like FXjunction.com and Myfxbook.com as well as several brokerages with copy trading services as part of their platforms.

The purpose is obvious the results are dubious. Many traders and investors are attracted to the allure and seeming safety offered by copy trading services. What could be easier than checking your account once a week to see how much money you have made. In fact, copy trading has become so popular that there are now even phone apps so that you can copy trade on the go. Copy trading makes it seem simple but there are many pitfalls. One important thing to remember is that regardless of the service they are not all the same so take the time to learn what is right for you. Past performance is no guarantee of future results, especially if that past performance is in question. The first step in understanding how copy trading works is to understand the different kinds of copy trading available today. Most platforms have a demo account which is the best way to get started. You don’t have to give any credit card details and you can follow along just like if you were trading a live account. Once you get comfortable with the service you can move on to real money.

However, if you are like me, you already know that you don’t have the temperament, time or knowledge to trade profitably. This is where copy trading can be a good thing. Choosing the right service and the right trader is the key.

There are

some real benefits

to copy trading. It

relieves the burden

of research,

brokerage fees

and some risk.



CHAPTER THREE:

Risks And Rewards Of Copy Trading


As in all kinds of trading and speculating there are risks and rewards to be considered. Due diligence is required in order to make the right decision. Not all kinds of trading are right for all kinds of traders and not all sources of copy trading are the same either. Each service must be examined to understand the nature of the trades and system employed for generating signals. This risk and reward analysis is common to any trading, speculating or investment strategy. In addition there are also some risks and rewards unique to copy trading.

Risks Of Copy Trading - There are always risks to trading but those risks are enhanced by copy trading. When you trade on your own you assume all risk and take all responsibility. When you copy trade you still take on all risk and responsibility but you are at the mercy of someone else’ decisions. There is no way to be 100% sure about any trading decision, especially if you are not making it. There are too many factors involved, plus market mentality is highly subjective and extremely fickle. Use my experience to alleviate the risks associated with copy trading.

Additional Risks Of Copy Trading – Copy trading relies on technology. Technology does not always work the way it is supposed to. For example, a few seconds of server lag during a time of extreme market volatility may translate into hundreds of pips of lost profits due to negative slippage.

Your copy trading account will be vulnerable to server failures, bugs in the programs and every other form of technological risk. There is also the risk of choosing the wrong platform, choosing a poor trader or losing track of your account.

I am going to have to restate my earlier warning about the risks of trading. Trading carries inherent risk. Buying and selling Forex options can result in significant losses to your account. These losses may be larger than the original deposit and result in a margin call, as has happened to me in the past. Past returns are no guarantee of future performance. Forex

Not all kinds

of trading are

right for all kinds

of traders and not

all sources of copy

trading are the

same either.



trading is not an investment and you should not use any money intended for other purposes. Additional risks include but are not limited to computer malfunction and delayed or improper order execution.

Should I take all the trades or not? This is a question that I get asked all the time. My answer is always yes, it has to be. Copy trading signal services are based on strategies that over time produce regular results. In order to benefit from the long term success of a signal service you must take all the trades. If you pick and choose, cherry pick, second guess or just plain miss some of the signals then you put yourself at increased risk of loss. How can you know if the trades you miss or take are the winners or the losers? What if you pick all the losers and leave out all the winners? If you do not take all the signals then your results will not match those of the master account.

Rewards Of Copy Trading - Don’t be alarmed, there are some real reward to copy trading. First and foremost it is a great way for new and inexperienced traders to get a start in Forex trading. It is also a great way to take the pressure of trading decisions off of your shoulders. Trading is not for everyone, for more than one reason. Not everyone can overcome the rush of fear and greed that controls our emotions and can influence our trades. Copy trading is one way to separate yourself from the markets in order to utilize objective trading decisions. Copy trading can also enhance your gains. If you are already successful, dedicating some money to a copy trading account is one way to enhance gains. Especially if the master account you choose to follow is really good.

Another question I get asked all the time is what kind of return should I expect. This of course will vary from service to service and trader to trader but 3-5% is a good minimum to look for. This amount will double your account every 12-18 months providing you do not remove your profits. With this in mind it will be possible to turn a $10,000 investment into a quarter million in about 8-9 years.

In order to

benefit from the

long term success

of a signal service

you must take

all the trades.


CHAPTER FOUR:

How To Pick The Right Service



Picking the right service is crucial for your long term success and satisfaction. As I said earlier, not all copy trading services are the same. You will need to fully understand how the master account generates signals, how you will be able to act on them and what you will need to do to set it up.

What Is Best For MeIn order to understand what kind of copy account is best you will first need to understand a little bit about Forex and what kind of trading is best for you. What is your risk tolerance? What kind of analysis do you want the trades to be based on? Do you want to trade long or short? After answering these questions you will then be able to venture out into the world of copy trading services and choose one that fits your needs.

Risk Tolerance – This is how much money you are willing to put at risk, how much volatility you are willing to sit through and what kind of strategies you are willing to use. Risk tolerance is not always about how large your account is. Usually, successful traders view risk as a percentage of their accounts. Instead of always trading $1000, or $5000 they may choose instead to always trade 1%, 2% or 3%. Utilizing a percentage instead of a dollar amount means that trade size will change with account size, never putting the entire account at risk. The more you are willing to risk with each trade equates into a higher risk tolerance.

Type Of Analysis – What kind of analysis is the master account using? Is it based on fundamentals or technical analysis? Is it a widely recognized and approved method of trading or is it new and/or proprietary? These are important questions to answer before committing an account to any copy trading service.

Long Or Short? - This is not always as important as some other aspects of copy trading. Generally, Forex positions are either long or short and most strategies will incorporate both kinds of positions. Some traders are more comfortable

You will need

to fully understand

how the master

account generates

signals, how you

will be able to act

on them and what

you will need to

do to set it up.


trading only long positions, others seek the fast action and quick buck of short positions. Regardless of your perspective it is a good idea to at least have a working knowledge of long and short positions.

How Does It WorkOnce you have an idea of what is right for you and what you are looking for in a copy trading account it is time to move on to the copy trading services themselves. When searching for services that match your needs you should also check into how the service works.

Cost - The first question is cost. How much does the service cost? Some are free, others not. You would think a paid service would be better than a free one but that is not always the case.

A free signal provider with a low average profit per trade means you will be paying a lot of fees in terms of spreads. For example, a paid service provider who has a Return on Investment (ROI) of 10% per month and takes fewer trades compared to a free signal provider who makes similar Return of Investment (ROI) per month, but initiates a lot of trades with short profit targets, the paid service provider may turn out to be actually cheaper. Hence, always analyze each and every signal provider based on their actual trading history instead of comparing nominal results.

There are plenty of free services that only require you to sign up and have legitimately successful traders to copy. That is the purpose of this Ebook. To help you understand copy trading and be able to make an informed decision.

Account - Some require you to open accounts with specific platforms or brokers. Third party providers are the most likely to require this. They usually have some sort of deal set up that allows them to link accounts to the master account for copy trading services. Of course, if you choose a platform with a service you will have to use that platform to get the service.

Once you

have an idea of

what is right for

you and what

you are looking

for in a copy

trading account

it is time to move

on to the copy

trading services

themselves.



Automation – Automation is a critical factor when choosing a copy service. Not all services are automated or enable you to link your account. Some services rely on emails, sms, text or phone calls to deliver signals. These services put the burden of placing trades on your shoulders and require you to have market access whenever the market is open. This increases the chances that you will miss signals or get in too late to be profitable. The best copy trading services are automated. Linking your account enables you to make trades mirroring the master account at the exact time the master account makes a trade.

Is Your Account Right For The Master AccountThis is a factor that not many people consider. Is your account, and by that I mean your account size, right for the copy trader you are following. Is there a minimum balance required to follow your trader? What size trades is the master account placing? Are they bigger or smaller than your account. Obviously you can not place a trade that is larger than your initial deposit or current trading balance. Does the copy trading account allow you to follow along placing trades based on a percentage of account size and if so does that percent fit your risk tolerance. Just because a copy trading account is perfect based on your needs it does not necessarily mean that your account is perfect for it. Be sure to check into what the copy trading account may require as a minimum account balance and if trades are based on percentages or dollar amounts.

Check The DataChecking the historical data is always an important step when making any investment decision. Why bother with an account or strategy that is not making money or one that is losing money? With historical data, you can also analyze a signal provider using trend lines! We will be discussing how to

Just because

a copy trading

account is perfect

based on your

needs it does not

necessarily mean

that your account

is perfect for it.


use trend lines to choose a signal provider shortly. Historical data is important but does come with some caveats. First and foremost, past performance does not guarantee future results. For another, depending on your source and service the data may be tampered with, inaccurate or misleading. The benefit of most leader board and social trading websites is that the historical data is posted for everyone to see. Accounts usually show a list of open and closed trades, account balances and win/loss ratios. The best sites offer some form of guarantee for their data and have to stand on their reputations for their business to succeed.

How Much Data – How much data should a good copy trading account have? That is a tricky question and depends on how well known the trader is. An unknown trader will definitely need more data to convince me of their success rate than an established trader will. A new account, with less data, started by an established trader will not require as much data as a new trader to get me on board. So, the data is important and should be checked but also check into the trader or business behind the account to see what kind of history they have as well.

What Does This Mean - Some data provided is confusing or just plain meaningless. Be sure you know what you are looking at. For example, what does daily turnover mean? This is the amount of money, or account size, that the account trades on an average day. Traders with a high daily turnover are trading more often or with larger positions than one with a low turnover.

Are There Any Hidden Trades – When looking into the data search for hidden trades or losing trades that are still open. Sometimes a trader or service provider will allow losing trades to stay open in order to avoid posting an actual loss. This results in better statistics for the master account by preventing the losing trades from registering. Take note of any trades that have been open for an unusually long amount of time or have an unusually large amount of loss for an open trade.



What Is The Draw down – This refers to how much money, or pips, each trade is allowed to lose before being closed. Accounts with large draw downs compared to the average win percent are not worth your time. What is the point of risking 100 pips for the chance of winning 10? The added risk of this is that with the spreads offered in Forex it is possible to be a net loser long term. The best copy trading accounts can net up to 30% per month with limited risk to you.

Check The ReviewsThis is the final step in choosing the right copy trading service for you. You have a knowledge of Forex and your risk tolerance, you know what the different types of copy trading are and how to match a service to your needs. At this point in the game you probably have a short list of services to choose from. Checking the reviews could provide that crucial bit of knowledge to sway your decision. Look for objective, third party reviews from actual users. Avoid reviews posted on the services website or that the service is pointing you toward. It is too easy for service providers to create the kind of reviews that result in you choosing them over another service. There are several great places on the internet to find forums where you can chat with other users and look up reviews/discussions about each and every service out there.

Checking the

reviews could pro-

vide that crucial

bit of knowledge

to sway your

decision.


CHAPTER FIVE:

Conclusions



There are many pros and cons to consider when looking at copy trading. On the one hand copy trading makes it easy for experienced and beginning traders to enter the Forex markets. On the other it adds an additional element of risk. Allowing some one else to make risky and potentially account breaking trades is one sure way to lose out long term. In the end copy trading is like any other form of trading, risky and not suited to everyone.

Is Copy Trading A Scam?I don’t think so. The copy trading websites themselves are not scams but it is possible for rogue traders to scam you with copy trading. Remember with the leader boards the traders you are following get paid a commission every time a trade is placed, so some traders maybe in there placing lot of small trades on a demo account just to earn the commission and not really too worried of wins or losses. The best way to avoid the scams is to educate yourself and find the best possible provider. But not only this you must also find the best traders. Check into the trader’s history, look at the trading record to see if there are any losers. You have to remember that this is the internet and there are a lot of people taking advantage of the system. This is not always the case but is a hazard to copy trading.

Paid ServicesIn the end you get what you pay for. This is why many traders prefer paid services to copy trading. In reality, however, a lot of the “free signal providers” can make more money from copy trading platforms instead of charging a periodic subscription fee like most “paid signal providers.” For example, ZuluTrade offers 0.5 pips to its signal providers from the spreads but offers the signals to investors for free. Therefore, a signal provider on ZuluTrade gets to make around $5 per trade from each standard lot traded through its signals. Hypothetically, if this particular signal provider has 100 live account followers who trade one standard lot (100,000) per trade, he gets to make (5 x 100) $500 per trade! With only 20 signals per month, he

The best way

to avoid the scams

is to educate your-

self and find the

best possible

provider.


would be making as much as $10,000 per month! If this provider were charging $50 per month for each of its subscribers as “paid signal provider”, his net revenue would be only $5,000. Regardless of which route you decide to take always look at their track record, talk to one of the representatives and check into whatever third party reviews you can find. Even a service costing you $200 a month may sound high but if they can give you a solid 5% to 8% return and you know that it’s being controlled by a currency trader with years of expertise the reward is clear. However, there are some real limitations to a paid service. They are not always automated and may require you to place trades in your account.

How To Get The Most From Copy TradingCopy trading can be an enjoyable and potentially profitable way to enter and experience the Forex markets. The best way to get the most from copy trading is to make really good choice, keep a close watch and understand that there is no guarantee it will be successful. Entering blindly will result in guaranteed frustration and loss, entering with knowledge and the guiding hand of a great copy trader can result in success. It is important to see past the glitz and glam offered by sites like Zulutrade and others and take a real good look at the substance behind the smoke screen. They offer a get rich quick scheme that is easy to fall for if you are not careful, but also a platform for legitimate copy traders to utilize. Taking the time to really investigate what and who you are investing in can help you avoid mistakes.

Once you have chosen a platform and provider don’t get complacent. There is still work involved. You have to monitor your own account as well as the master accounts of the traders you are following. It may be necessary to switch provider from time to time. Because it is the internet it is possible for nobodies to scam the system and thereby scam you as well. In the end copy trading providers get paid on a per trade basis so it is in their best interest to make themselves look as good as possible. If you discover you are following a questionable trader just get out, it’s that simple.

Entering

blindly will result

in guaranteed

frustration and

loss, entering with

knowledge and

the guiding hand

of a great copy

trader can result

in success.



Putting it into Practice:In this chapter we are going to put our simple but effective criteria into practice on Zulutrade.com to show how easy it is to find a trader to follow and minimize your risk of loosing.

First thing to do is print out the check list page at the back of the book as you will need this to follow along.

Once you are on Zulutrade.com (Open a Demo Account to Follow Along) click on the “Traders” tab at the top of the home page and you will be brought to the “Performance Table”. (See Diagram 1)

OOnce there select then “advanced” Tab in the top right corner. Also make sure the Time Frame is “Since Inception”, this will show you the best traders (according to Zulutrade) since the site started.

DIAGRAM 1




At first glance we are looking for Max Draw Down of 30% or less and 60% profitable weeks. From this list I am going to choose 2# EUR Spoon at the time of writing. His stats are showing 6.0% Draw Down and Profitable weeks at 65%. We can also see a healthy 287% ROI.

By clicking on EUR Spoon this will takes us to his Bio page where we can drill down to make sure the rest of his stats meet our criteria.

The nice thing about Zulutrade is everything you want to see is on the one page (See Diagram 2)

DIAGRAM 2



Here we are looking for a photo and also a description of his trading strategy and here we have both. Also we can see on the right side EUR Spoon currently has no open positions and has a “Max Open Trades” is 4. Remember we are looking for low risk traders because protecting capital is our greatest priority!

Also on this page we can see EUR Spoon has 2071 other traders like ourselves copying his trades.

With Zulutrade.com it’s a little difficult to see how long a trader has been trading for out-side of being with Zulutrade. If they haven’t mentioned it in their description don’t be afraid to ask them either through the social feed or listed contact information.

We can see from the amount of data that the account is just on 12 moths old. This is very good. The longer an account has been open the better.

Next, lets look at the “Statistics - All” which is to the left of “Overview”. (See Diagram 3)

Straight away we can see a 287% Return On Investment (ROI) since the account was opened. To work out if our 6% per month is correct then we need to do a little math’s. We know the account has been open for 12 months so if we divide the ROI x No. of months we get a 23% per month average.

If we scroll down a bit further there is some more information to help give us confidence that the numbers stack up. EUR Spoon has had 166 trades in the past 12 months with 108 being winners. This a decent number of trades to get a reliable set of data from.

Now if I where to see 100% winning trades that would make me want to look deeper as there are usually a lot of loosing trades open. To see if this is the case scroll down and look to see what “Open Position” there are. In this case there aren’t any.

If you see a list as long as your arm here or they have been open weeks, months and even sometimes over a year then it

DIAGRAM 3



doesn’t matter how good the other stats are look elsewhere. Just move on!

The last thing to check is this a live account, again sometimes this is a little hard to find on some sites but with Zulutrade.com you can see at the top next to the ranking if they are using a demo account. You will see a Circle with a Green $ sign, in this case there isn’t one. So this is a Demo account.

So let’s look how EUR Spoon stacks up with our criteria, he ticks every box except the using a live a count box. You are unlikely to find a Signal provider who is going to tick all the boxes. With just one “No” against him then I would add EUR Spoon to my watch list looking for the best time to enter.

How to Use the Trend Line Method in Copy TradingWhen you are analyzing a signal providers performance, you might often find great performance statistics. However, any veteran copy trading investor knows that past performance does not guarantee future results. Hence, a great signal provider may be “out of form” or his strategy might have lost the edge when you decide to follow him based on the past performance.

Therefore, it is often hard to decide when you should start following a signal provider and when to stop following.

Anyone familiar with technical analysis would instantly recognize the tremendous value of using trend lines to spot support and resistance in virtually any time frame. While Forex traders use this technical tool to identify individual trades, we have come up with an innovative idea to use trend lines to know exactly when you should start following a signal provider and when to stop following them in order to reduce downside risk.




Since technical analysis is new to a lot of copy trading enthusiasts, let us review how to use a trend line in trading first. Trend lines are basically a form of dynamic support and resistance that allow traders to visualize the high and low of a range in a trending market. In contrast to trending markets, in range bound markets, we typically use horizontal lines to identify the static support and resistance levels.

During an uptrend, Forex traders connect the lows to draw an uptrend line (blue). On the other hand, during a down trend, the highs are connected to form the down trend line (red). Once the price breaks below the uptrend line and breaks above the down trend line, it indicates a potential change in the prevailing trend.

We always recommend that you should always follow signal providers who have a strong track record of several months to over a year of data. One of the key reasons behind following seasoned signal providers is that it allows us to analyze the historical data and their trading patterns. Similar to using trend lines on a currency pairs, we strongly believe that we can also


analyze the historical trading data of a signal provider using the trend line.

The key concept behind this theory is that most signal providers can be divided into two categories, range traders and trend traders. During trending markets, range traders suffer the most. The exact opposite happens during ranging markets. Trend traders, who use small stop losses to capture a larger trending move, either up or down, get stopped out during range bound market conditions. Hence, we can apply trend lines to identify how a signal provider’s strategy is performing under “current” market conditions.

Let’s take the example of the above signal provider on the popular copy trading platform ZuluTrade. Based on around three years of historical trading data, we can see that this signal provider have performed very well during July 2011 to July



2012. However, for the next twelve months, the performance had been less than stellar. Using the trend line approach, once the trading performance breaks below the uptrend line, you would stop following this signal provider.

If you started following this signal provider based on the first year’s trading results, your capital would have been tied to this trader without generating any substantial profits. It means, the opportunity cost in terms of lost time and lost profits. You could have allocated that capital to another trader who was perhaps performing better during July 2012 to July 2013. Similarly, once his performance chart breaks above the down trend line in the first quarter of 2013, re-subscribing to this signal provider would have proved to profitable as well.

We understand that the whole concept of copy trading is to accommodate the idea that someone else would be doing the trading. With the trend line approach, you are still delegating bulk of the day to day trading decisions to the signal provider. However, applying a simple trend line analyses on the historical trading data of signal providers once a month, you could gain tremendously during the high months, then following someone else during thier flat months. We strongly believe that taking a few minutes, even an hour, every month to review the historical trading data of the signal providers of your choice can significantly increase your chances of becoming a successful Forex investor.

For a more detailed tutorial you can watch this video I made. >>Click Here<<

http://www.howtocopytradeforex.com/trend-line-video


How to Protect Your Profits Using the Higher Lows MethodWhile using trend lines can help you to pick the right time to start or stop following a signal provider, during a sharp uptrend, waiting for the uptrend line to break can result in losing a huge amount of profits. If you are comfortable with becoming a bit more pro-active in managing your portfolio of signal providers, using the higher lows method could allow you to retain a large portion of the profits earned from any particular signal provider.

Higher Lows are exactly what it sounds like, a series of pivot points on the chart, where the subsequent pivot lows are progressively higher compared to the previous pivot low. Manual Forex traders apply the same principle when they place short or sell orders during a down trend, where the subsequent pivot highs will be progressively lower compared to the previous pivot highs. Since we will not be following a signal provider when they are not producing profits, we would not concern ourselves with this method during a down trend.



Let’s apply the concept of using higher lows on the performance history of the same signal provider on ZuluTrade. Zooming in, as you can see that after July 2014, the signal provider’s performance once again picked up and it broke above the down trend line.

Now, if you are an aggressive investor, you can start following this signal provider once the down trend line is broken. However, it is strongly recommended that conservative investors wait for a new high to be broken, as identified with the green horizontal line, prior to start following the signal provider.

Regardless, when you choose to start following, you should start moving your stop orders just below the higher lows every time the performance chart creates a new high. In practice, it means whenever the signal provider’s performance will fall below the previous higher low, you will close all the open orders associated with the signal provider. Hence, your profits will be protected.


If you applied this method on this particular signal provider, from July 2014 to the end of the year, you would have gained around 3,000 pips of profit without taking any colossal downside risk. At first glance, it may appear to be a bit aggressive, but you should understand that there are thousands of quality signal providers available on ZuluTrade and keeping your funds allocated to a single provider when they are not performing well would considerably reduce your chances of earning a better return on your investments over the long run.

For a more detailed tutorial you can watch this video I made. >>Click Here<<

All Broker are not the SameBeginner Forex traders usually get lured by various marketing tactics used by “less-than-perfect” Forex brokers. The promise of sign up bonuses, tight spreads, and personal account managers are indeed strong incentives to choose a Forex broker. However, professional investors understand that the cost of doing business with a Forex broker is the only metric you should consider when deciding to choose the perfect broker. Those costs are usually materialized in term of spreads, slippage, and/or quality of trade execution during volatile market conditions etc.

In reality, however, there are no perfect Forex brokers, there are only Forex brokers who are perfect for you based on your style of trading or investing. For example, if you are subscribed to a signal provider who takes long term trades that yield on average a 100 pips of profit per trade, a tight spread offered by your Broker may not matter. Instead, things like the overnight swap rates and offer of free wire transfer withdrawal may prove to be a better deal. Similarly, if you only follow signal providers who trades exotic currency pairs like GBP/NZD or USD/TRY (US Dollar/Turkish Lira), and opens 20 trades a day, the promise of the lowest spreads on EUR/USD wouldn’t matter.


http://www.howtocopytradeforex.com/protect-profits-video

http://www.howtocopytradeforex.com/protect-profits-video


Let’s take the example of ProfitSwing from ZuluTrade. This signal provider only makes on average 9 pips profit per trade. If you were trading with FXCM UK and following ProfitSwing on ZuluTrade, on average, you would be getting a 1.44 pips slippage on every trade. Hence, the result in your copy trading account will be much worse (around 16%) than the signal provider’s account because of the added slippage. If ProfitSwing makes around a 10 % return per month, you will be only making an 8.4 % return per month or 19.2% (1.6% x 12 months) less return per year compared to the trader. If you have invested $10,000, it would mean that the 1.44 pips slippage will cost you $2,304 over a single year of trading. When you consider picking a signal provider, you should always consider effects external performance factors like slipping on the overall performance of the investor’s account.

Moreover, not all brokers are the same. Some brokers offer copy trading service in conjunction with third party platform providers. While companies like ZuluTrade and MirrorTrader revolutionized the copy trading industry by introducing an easy way to copy third party signal providers, they themselves do not provide Forex brokerage service. In contrast, some brokers like eToro has built the copy trading cloud platforms


in-house and offers integrated copy trading services to their traders and investors. Then there are other brokers like IronFx and ThirdBrainFx who utilize licensed third party technology solutions to offer copy trading service without relying on third party companies.

As a rule of thumb, you should always prefer a company trading service which offers an integrated Forex brokerage service. This is one of the easiest ways to reduce transaction costs because the services are vertically integrated. As your broker will not pay third party commissions, they can pass on the savings to their clients and offer competitive spreads.

However, it is equally important that you decide to open a live copy trading account with a service provider only based on the quality and performance of the individual signal providers who you will ultimately follow, not based on the fringe offers like bonuses.



I want to help you start making money today. In order to help with this I have created

a check list from my years of experience in the Forex copy trading world. This list is

a step-by-step guide to finding and following the right copy trader. It’s easier than

you think, it is possible to stop losing money in Forex and you don’t have to spend

all your cash on teachers, seminars or coaches. The best thing I ever did for my own

Forex account was to realize that I am not cut out to be a day trader. I would get

caught up in the action and end up losing every time. Even if I had a good run of

profits my euphoria would lead me to make huge mistakes and soon all my profits

would be gone. Worse, sometimes I would lose more than I originally intended to

risk. Now, with copy trading I can enjoy the freedom of managing my own account

without the hassle or struggle of actually trading my own money.

Tips For Maintaining Your Copy Trading Account

Don’t put all your eggs in one basket. Choose more than one trader to follow so

that no one trader can wipe you out. This is the same type of allocation and risk

management strategy used in other forms of trading or investing and one I feel

useful for copy trading too.

Check your account every day. We are talking about day trading here even if you

are not the one doing it. If your trader has had a bad day then you should know

when it happens, not when you get a margin call. You may need to suspend

trading or you may want to switch traders altogether. In any case, you need to

keep track of what is happening in your account in order to avoid unnecessary

losses.

Follow up with your trader. Make contact if possible but definitely follow along

with any comments or other information provided. Also, keep investigating, you

may find out that the trader you are following is not what he first appeared to

be. Another good idea is to monitor and keep up with comments and reviews

from other copy traders and add your own comments where applicable.

Maintain a demo account with your chosen service and keep looking for new

traders as every system has a life span so always be on the look out for new

traders to follow and use your demo account to trial them before committing

funds.


Final Comments:

Now it’s time to take the knowledge from this ebook and put it into practice, watch

the video tutorials on the web site so you will know what to expect from each

service, sign up for a demo account and have a go.

Good luck and please remember all forms of trading involve risk. Copy Trading in Forex is no different. It’s very risky. Only invest funds, that if lost would not affect your lifestyle or cause financial hardship.



Forex Copy Trading Survival GuideCheck list For Picking The Right Forex Copy Trading Service

Service:Name of Copy Trading Site. What is the name of the service?

Traders Name:Name of the Trader. Many traders use fancy handles like TradingGuru78 so it is sometimes hard to know just who you are following. The best traders will let you know who they are.

Photo and Description:This is also for peace of mind. Traders that take the time to fill out their bio’s, provide a picture and a description of their experience and methods are usually a better choice than those who haven’t. If everything stacks up the next step is to get in touch and ask some questions.

Number of Copiers:This is important to note. Traders with the most followers are likely to be a better choice than those with only a few. However, there are some caveats. It is possible for bad traders to grow followers through black hat methods. It is also possible for really good traders to have accounts with only a few followers. Check how many followers there are and then contact a few and ask them questions as well. If they have no one copying them you have to think to yourself why?

Account Type:It’s always best to follow traders with live accounts. That is, they are using real money to trade with and not a Demo account. This can be difficult to determine with some sites. Properly checking into each trader and account can help to uncover the truth.

Account Age:Look for accounts that have been trading for longer than 12 months, the more data they have the better. Stay well clear of any accounts less than 6 months old unless you know the trader or service


Traders Experience:Look for traders with 2 years or more experience. Again, this can be hard to determine with some sites. Most sites allow for you to contact other traders in one of two ways. Via their live feed or through private message. Once contacted you can see how long they have been trading. If they try to dodge your questions move onto the next trader.

Max Drawdown:We are looking for low risk traders with consistent profits, so a lower drawdown is preferred.

Monthly Gain:Again we are looking for low risk traders giving a good consistent profit. Protecting our capital is our Number 1 priority! With an average 6% gain per month and not withdrawing your winning you will double your money in 12 months. Just remember the higher the gains the more risk a trader needs to take to achieve them.

Profitable Weeks/Win Ratio:Some sites have Profitable weeks other have Win ratio, either way it’s pretty much the same thing. We are looking for 65% or better, that way even if their average losing trade ($) is higher then their average winning trades ($) you should still come out in front.

Open Trades:This is very important to look at and if a site or trader does not show you their open trades then move on. This is one of the most important things you need to know! You must know if the trades are really being placed and how many are open at one time. You also need to know if losers are being held for too long in order to skew the trade data.

Totals:Total up the Yes’s and the No’s. If you have more Yes’s than No’s then you have a good candidate for a trader to follow. Obviously we are going for all Yes’s to give us the best chance of growing your account. I suggest finding a few traders to follow. Don’t put all your capital with one trader. Keep track of results individually and adjust who you follow as needed.



Summary:This will not guarantee you will not pick a bad trader or a trader who’s system stops working. To guarantee that you need to keep a close eye on your account if not every day at least at the end of every week.

If the web site offers a demo account I suggest you start there before you add funds. Even after adding the funds it may pay to trail new traders in the demo account. Once they prove themselves you can add them to your live account.

Everything we are doing is to give us more confidence that we have chosen the right traders. As for the number of traders you should be following that’s a personal choice but at least 3 to help spread the risk and no more than 5.

With some sites you can allocate how much money each trader can use. This is also a good way to add in new traders. Allocate a small percentage to each new trader until you are comfortable with their performance. Then slowly increase that amount till you reach your limit for that trader.

And please remember all forms of trading involve risk. Copy Trading Forex is no different. Its very risky. Only invest funds, that if lost would not affect your lifestyle or cause financial hardship.

Happy trading…….

Service

Traders Name

Photo & Description Not essential but preferred

Number of Copiers Not essential but preferred

YES NO

Account Type Live ❏ ❏

Account Age Greater than 12months ❏ ❏

Traders Experience Greater than 2 years ❏ ❏

Max Drawdown 30% or Less ❏ ❏

Monthly Gain Average 6% or better ❏ ❏

Profitable Weeks/Win Ratio Above 65% ❏ ❏

Open Trades If carrying Losers over 2 weeks old tick NO ❏ ❏

Totals

All forms of trading involve risk. Trading forex is no different. Its very risky. Only invest funds, that if lostwould not affect your lifestyle or cause financial hardship.

www.howtocopytradeforex.com


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