Step 1: Create a Strategy
It is not a good idea to just throw yourself out there and start mirroring other traders willy-nilly. Do you homework, and then put together a strategy for your trading. Do you want to follow human traders or use Expert Advisors (a type of algorithmic bot)? Which instruments do you want to trade? What will your budget look like? How risky do you want your strategy to be?
Step 2: Select a Suitable Broker
Don´t rush this step. Choosing the right broker for mirror trading will have a big impact on your results. You want one that is ideal for the type of trading you wish to do, e.g., instruments and costs. Don´t forget to check all the costs, not just commissions.
Always test-run the trading platform using free play-money before you decide. If plan on trading on your phone, test it on your phone and not on your computer. Some platforms work great on a big screen but not so great on a small touch screen.
Step 3: Select a Master or Expert Advisor
Bring out the trading strategy that you create in step 1. Now, select a Master or Expert Advisor that aligns well with your trading plan.
Some novice traders prefer to stick with just one Master / EA, to begin with, to keep it simple. Others prefer to follow several in order to spread risk. Both choices have their pros and cons.
Step 4: Start Trading
Follow the instructions from your broker and the platform about how to make a deposit and start doing mirror trading using real money.
Never risk money that you can not afford to lose. Even if you decide to follow a Master or EA that has been highly successful in the past, there are never any guarantees.
Q & A about Mirror Trading
Is mirror trading only for forex?
No, it is not. Mirror trading is very popular among forex (foreign currency)
What is best – mirroring a human Master or mirroring an Expert Advisor?
It is not possible to say that one is better than the other, as both have their pros and cons. Some traders like the fact that an Expert Advisor is a pre-programmed robot completely devoid of any emotions. Other traders like that a human Master isn´t a robot. A human Master can for instance realize that a certain sudden price dip is likely to be followed by a rebound within short, and refrain from realizing a bunch of losses just because the prize briefly dipped below a certain level.
Is mirror trading risk-free?
No, it is not. You can always lose the money you risk. Do not use money that you can not afford to lose.
Even if you decide to follow a Master with an excellent record, there are never any guarantees. Past success does not guarantee future success.
Can leverage be used for mirror trading?
Yes, some brokers and platforms support leveraged mirror trading.
When you use leverage, you borrow money for trade. Of course, this adds a new element of risk, since you can lose the money you never had.
Example: The Master makes a £10,000 purchase. You use £1,000 from your account and borrow £9,000 to be able to mirror the trade. Therefore, you risk losing £10,000.
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