What Is Mirror Trading?
If you have newly started your forex trading, you might have experienced that it’s not easy to design a profitable trading system, nor is it easy to keep up with the market movements all the time. Imagine a scenario where you could just ask your broker to give you performance records of their other traders, select a few of them with good trading history and then, order your broker to just copy their trades into your own account. Imagine a scenario where the broker would give a list of their best performing traders’ right in your trading platform, you decide with the click of a button that who you want to follow and there, you have his real time trades.
The good news is that your imagination is not just a dream anymore. Yes, you do have access to the successful trader’s records and you do have the facility to choose the best. You do have the facility to copy their trades and the cost of it… Nothing, Nil, Nada.
This concept of copying somebody else’s trades is Mirror Trading and it is becoming so popular that even the investing companies have started setting up their small-size businesses around it. What more can you ask for when you know that its in effect, the best of traders in the world who will put their trades into your account and your trading is going to be completely ‘hands free’. Log into your account at the end of the week and withdraw your profits, easy as that.
How this is done is that some Mirror-trading companies collect and keep collecting the best of traders from different parts of the world. They give them free accounts to trade so that their performance histories are created for audit and testing parameters. At the same time, these mirror-trading companies keep displaying these traders’s up-to-date performance records on their websites. The best performances obviously come at the top.
In the back office, these companies have a tie up with multiple brokers who would let these companies operate as their Introducing brokers and give them the facility to auto-configure ‘many accounts’ into one single ‘master account’. “Many accounts’ are held with the broker and the ‘master account’ with the company. The company awards the master account to the top performers who put their trades in these accounts to be mirrored to the other connected accounts.
Now when the client selects a trader to operate his account, the client is advised to open an account with the recommended broker for this master account. After his account is opened, it is auto-configured to the master account of the selected trader and now whatever the trader does in his own account is automatically replicated/mirrored in the client account also. Of course the client is free to choose his own risk-management parameters so that the occasional aggression or the failure of the chosen trader does not reflect in the account.
On all the trading activities in these accounts, the mirror trading Company earns a commission out of the trading spread which they distribute to the master account trader and spend the rest on their company expenses as well as advertising budgets to attract new clients. In the end, everybody gets a win-win situation where the master trader earns extra money for the same trades that he would have played anyways and the companies earn a living via trading commissions. 3rd Party, the fellow to gain the most is you, whose account is being operated by the best of the traders, at ‘no cost and no effort’ on your part. Isn’t that truly the essence of ‘Hands free trading’ and ‘The easy money’?