The Lucrative Automated Income from Foreign Exchange Trading

One of the tools that has become available to Forex traders in recent years is known as a trade copier.  So, what exactly is a trade copier?  The name itself is rather descriptive of what a trade copier does; it will copy trades from one computer to another or from one MetaTrader4 terminal to another.

Now what kind of applications can this have for us as traders?  Let’s say for example that you are a struggling trader and have not found success with trading on your own.  Did you know that it is possible to copy trades from successful traders?  There are traders out there who publish their trades so that others can copy them and benefit from their trading success.

An Interesting Concept That Didn’t Exist A Few Years Ago

This is a fascinating concept but one that has boomed in recent years.  The idea is fundamentally sound, but it can be difficult to implement without the right technology.  If a trader has a track record of success, has been trading for the last 20 years, and they decide to share their trades so that others can benefit from them, then they will need a bridge to make that exchange possible.

You may have seen signal services that will email out the trades taken by a professional trader.  This is all well and good but it still requires a very active presence to execute the trade recommendations that are sent.  This is where the role of a trade copier comes into play.

The Purpose And Value Of A Trade Copier

The job of a trade copier is to mirror/copy the trades from one trader’s account into the account of another trader.  The technology is not easy to create, and only a few very smart programmers have been able to create working tools and make them available for others to use.  The advantage of a trade copier is obvious; struggling traders can now benefit from the successful trades of professional traders.

Here are some other reasons why you may want to look for a trade copying solution to help grow your trading accounts.

You Don’t Have The Time To Trade

The vast majority of traders have a full time job and therefore have limited time available to trade.  This creates a problem.  Trading is often quite  an active process, requiring many hours of effort each day to achieve success.  While this is not always the case, having a trade copier that transfers a professional trader’s trades is one way to overcome this obstacle.

Trade copiers run in the background of a computer and require no intervention after their initial setup in order to run successfully.  All you need is a stable power supply to the computer and an internet connection in order to successfully copy trades, and even if these two things are not available then there are still VPS (virtual private servers) that can run the technology for you. So you don’t even need a computer running any software at home.

You Don’t Have An Effective Trading Strategy

Another challenge facing almost every trader is the lack of a successful trading strategy.  It is said that 95% of traders fail to make money.  This is a shocking statistic, but one that is likely to be accurate.  Currency trading is one of the most difficult skills in the world to master.  The potential is great and hundreds of thousands of people around the world attempt to trade successfully on their own, but most traders fail consistently.

What if you are unable to find consistent success in trading?  Does this mean the game is over for you?  Does this mean that you should quit?  Not at all.  Instead you should consider benefiting from the trades of a successful trader (or use an automated trading strategy).  There are a handful of successful traders out there who are consistently turning a profit AND are willing to share their trades with others.  Most traders will charge a fee for their services, but this is very understandable.

Compare Trade Copying From A Professional Trader To a Mutual Fund Manager

This principle can be easily compared to a successful mutual fund.  With a mutual fund, many investors pool their money together and entrust that money to the fund manager, who will in turn invest that money for a positive return.  It is based on the principle that one very successful trader/investor can increase an account’s equity through successful investments/trades.  This very same principle can be effective with currency trading by using a trade copier and receiving trades from a professional trader (or automated trading software).

You May Opt For a Trade Copier Because You Don’t Have The Discipline To Trade Successfully Yet

Many traders simply do not have the discipline, or have not yet learned the discipline, to trade effectively and profitably.  There are many different aspects of trading and almost every trader fails to make money.  As mentioned, it is one of the most difficult professions in the world to succeed in, but what if discipline was not a requirement for success?

What if we could benefit from the signals of a professional/profitable trader?  This would eliminate our weaknesses and enable our accounts to grow, because after all, it doesn’t really matter if we are not doing the trading ourselves so long as the account is growing consistently! Herein lies another advantage of using a trade copier to grow your account; the hard work will be done for you.

Add Diversity to Your Trading Portfolio

There is a fundamental advantage of adding diversity to a trading or investing portfolio. People often say “don’t put all your eggs in one basket“, and this is a very wise principle, as those who invest in stocks might be considered foolish if they put all their money in just one stock.  What would happen to their investment if that stock turned sour and failed to produce a positive return?  The money would be lost and the goal of the investment would not be achieved.  However, if an investor has many different stocks then the chance of success may be greater because there is diversity.  Even if one stock fails the others may continue to succeed and produce a positive overall return.

This is the benefit of diversification in a stock portfolio, and this principle can also be applied to forex trading through the use of a trade copier.  For example, if you have one professional trader who you receive trades from (via a trade copier) it is understandable to want to receive trades from another successful trader as well.  With such an approach there can be diversity because if one signal provider has a bad month, the other(s) might do quite well.

Remove Yourself Emotionally from Your Trading

Often one of the major failings that traders face is becoming emotionally attached to trades.  Bad traders will tend to hold on to losers and cut the winners too early.  Trading is a very emotional thing to do, because any time that we risk our hard earned money the emotions will soar.  It is very difficult to train ourselves to become unemotional about trading, and it often takes many years to do it.

Utilizing a trade copier and receiving trades from a professional trader or automated trading software will not eliminate emotion altogether. However, it can be an effective tool to help reduce emotional attachments to trades.  It is possible to set up a trade copier with a subscription to a professional trading service and simply check the performance once a month, which removes anxiety from the day to day swings of trading.

Every Strategy Will Have Losing Streaks

After all, just because a trading service or strategy has a bad day, or two, or three, it does not mean that it will make for a losing month.  Even though there may be a losing month, or two, or three, it does not mean that the strategy will not post positive gains for the year as a whole.

This principle is very important and is often overlooked by amateur traders who see a few losses (or a losing month) and conclude that the system does not work.  The time period is too short to look at.  Any trading strategy must be looked at with a broad time perspective.

How Do I Find A Good Trade Copier Solution and Use it To Grow My Account?

For all the reasons mentioned above, a trade copier may be able to help you find good trading success, but another question arises and that is, “how do you find the right strategies to copy?

It is a very important question of course.  After all, what is the value of a good idea if it cannot be properly implemented?  In order to put this idea into practice and benefit from it we will need two things.  The first is a successful trade copier software that will work smoothly and fluidly, and will transfer trade orders between two (or more) different traders’ accounts.

The second component to implementing this plan is to find successful trade providers that you can copy their trades.  This can be easier said than done.  Fortunately, there are already a handful of successful traders, and also successful automated trading software, that can be used with this trade copying strategy.  The real trick is to decide which ones are the best ones to use for your account.  Some are more risky than others, and some simply don’t work (even though they say they do) so the real trick is to distinguish between the good, the bad and the best.

Researching Trade Providers

You’re going to want to start by researching trade providers that publish their trades to an independent third party metrics tool like MyFXBook.com, for example.  This is a wonderful service that allows you to evaluate a service provider and research their trading history, which is very important.

Do not rely on the numbers that are published on a signal trader’s website.  Instead, make sure you look at MyFXBook.com (or another metrics service) to verify the numbers that they publish.  If a provider says that they make 500 pips per month on average, take a look at their third party verification and make sure that you can see these numbers from their available history.

Study The Numbers Carefully

You can learn many things by researching a trade provider’s history with a third party verification tool.  You’ll be able to see where they’ve had struggles and what their winning percentage is each month.  You will also see whether they are trading with a live account or demo account.  The third party verification tools have special safeguards in place that will help verify account ownership and legitimacy.

Make sure you study the metric numbers very carefully.  You can learn a lot by spending time with these numbers.  Sometimes a provider may report a gain of many hundreds of pips, but yet the account balance is continually shrinking.  This phenomenon occurs when winning trades are closed with partial position closes, but yet the loss trades are closed in full.  Doing so is not necessarily a bad thing, but it can skew the results so that the pips display as a gain while the overall equity on the account has decreased.

More Specifically, What Should You Look For In A Signal Provider?

Overall, you need want to find a trade provider that offers consistent gains.  Every month will not be a winning month; it is near-impossible to have every single month as a winning month.  For example, an extremely good trade signal provider might have a track record that looks like this: +661 pips, -1043 pips, +874 pips, +591 pips, +545 pips, +744 pips, -700 pips, +302 pips, +1227 pips. 

If you were to just look at the first two months, You might conclude that this is a losing strategy.  After all, this provider was negative by 400 pips after the first two months, but this is only part of the picture.  He average and the total gain must be taken into account in order to have a clear picture of how well any signal provider has done.  Of course, past performance is no guarantee of future gains, but all we have to go on is past performance and the better it is, the better the trading strategy is likely to do in the future.

In this specific instance, the gains over the nine months totaled a very respectable 3201 pips.  If you had traded with this provider using a standard lot size for each trade with a $50,000 initial account, your gains would be approximately $32,000 over the nine month period.  This is very respectable indeed and represents a gain of almost 65% on the account.  You will want to look for a signal provider that has a track record for success that can be verified, but remember, don’t look for a provider that never loses, but rather look for a provider that shows consistent gains over time with no huge drawdowns.

Consistency Is The Name Of The Game

Combining all these ideas together is a recipe for success in Forex trading.  Finding and benefiting from a top rated signal provider (or automated trading software) is one of the best ways to grow an account these days.  However, consistency is the name of the game.

You must stick through the losing trades (and losing months) to be able to enjoy the winning ones.  Trading is (I will mention it again) one of the most difficult professions in the world.  The upside is that it can also be one of the most lucrative professions in the world.  It is one of the few businesses where you can start with very little money – sometimes as little as $500 – and grow it, over time, into several hundred thousand or even millions of dollars.

Exercise discipline and patience as you implement a trade copying service into your account.  Imagine where your account could be in five years if you were simply able to earn 5% per month on average.  Truly an exciting prospect, isn’t it?

About the author

Rimantas Petrauskas

First I am a father, a husband and then the author of the book “How to Start Your Own Forex Signals Service”. I am also a Forex trader, a programmer, an entrepreneur, and the founder of ea-coder.com Forex blog. I have created two of the most popular trade copiers and other trading tools for MT4 that are already used world wide by hundreds of currency traders.

6 Comments

Leave a comment
    • Dear gangatharan,

      EA’s sold on ea-coder.com are trading tools which will not generate you income without human intervention.
      I have a signal service at http://www.vavatrade.com where you can follow my trading account and make money in the long run.

      Hope this helps.

      Regards,
      Rimantas Petrauskas

  • Great article , making a nice read. Forex, being the most difficult and most lucrative profession in the world, one must be willing and able to put in the time to achieve success. But once successful, it is sweeter than honey!

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Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
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