When to Move from Copy Trading to Picking Your Own Trades


Unless you’ve benefited from an economics degree, MBA and internship on one of the best trading floors in one of the best investment banks in the world, you like most people will have had to start learning to trade Forex at the bottom. For many of us this means taking on some form of copy trading software to allow us not only to profit from the knowledge of others, but to also be able to learn to understand a little more about how the markets move and when they are at their most potentially profitable.

Copy trading software varies greatly in price, functionality and flexibility but each and every option on the market will give new or unsure traders the chance to make profits without yet fully understanding how Forex pair charts move. The software systems, which have been popularly available for some time now, are like your very own personal mentor, guiding you through the formative years of your trading life.

Walk, Don’t Run

What will inevitably happen for many traders after a little time though, is that they begin to feel a lot more comfortable with particular markets and particular currencies. They will start to develop an understanding that leads them to believe that they could start putting their own trades in or running side strategies alongside their copy-trading program. It is only fair to think that anyone who does something well for long enough will begin to feel like they are able to branch off and do things on their own but it’s important for any trader in this position to remember that there is a lot more to be taken into consideration than simply having the belief that you could do better than the person you’re copying.

This is of course not to say that no one should ever move on from exclusively copy trading but it is fair to say that the majority of people who move away from copy trading do so too quickly, at too early a stage in their careers and subsequently learn the hard way how much of an information gap there really was between their perceived knowledge and their actual knowledge. Making money from Forex markets in the long term is a marathon not a sprint. It is not so much about those one off trades that resulted in 10, 20 or even 30 times your initial investment, anyone can land one of those at least once in their career. It is about consistently maintaining a winning strategy that plays the odds, locks in secure profit and works to a strategy that delivers time and time again.

A little knowledge can be a very dangerous thing and this is perhaps no more true than it is with the trader who wants to move from copy trading to placing their own trades and rolling out their own strategy. If you feel like you are at this position, the best thing to do is to test the water, with your toe not your whole leg!

Test Yourself

Anyone who is considering moving capital from a copy trading account into an autonomous one should do so fully aware of what they are embarking on. If you are really serious about your ability to do better than the trader you’ve been following why not put your skills where your mouth is (in this case we are trying to avoid putting the money there just yet). If you don’t already have one, open up a practice account and spend a week implementing your own strategy to see what profits, if any, you can come out with. At the same time, keep an eye on your copy trading account and see if you can predict the decisions that the trader you are following is going to make.

It might seem arduous to run a spreadsheet and daily write up of your activities with both but at the end of the day, we are talking about moving substantial amounts of money away from the “control” of a professional trader with a proven track record and moving it into the hands of someone far less qualified and much more emotionally attached to the results, you. There is no harm to be had in laying out a fairly rigid testing scheme to ensure that you are ready to make the switch. After all, the beauty of Forex markets lies in their ability to offer leverage and profit potential 24 hours a day, 365 days a year. Unless a repeat of Black Monday or something similar occurs during your testing week, you’ll not be missing any opportunities by delaying your switch.

Other Options

For the people who lay out such a test as above and find at the end of the week that they have not only met but surpassed their expectations, it is fair to say that they are then ready to start rolling out their own strategy. Even still, there is no need to jump in head first. Taking a percentage of your bankroll and applying it to your own strategy while letting your copy account continue to run with the remaining funds will keep you that little bit more protected than simply moving everything across  in one go.

However, for those who don’t quite meet their requirements, or perhaps even fail to make any kind of profit at all, there is no need to worry. In the same way that turning a massive profit in your first solo week doesn’t mean that you’ll go on to make millions, cutting a loss doesn’t mean that you’ll never be able to move away from copy-trading. And after all, even if it did, would that really be the end of the world? The fact of the matter is that you may just not be ready yet to take on markets under your own control and there’s absolutely nothing wrong with that. It takes a strong person to look at a situation and conclude that they are not yet ready so choose to walk away and prepare some more. Those who take the alternative and just go running in headlong in spite of what they know to be right are the cowardly ones who will end up paying for the lesson dearly.

So what are the steps that you need to take if you’ve felt that you were ready to start picking your own trades but now realize that this time has not yet come? Well, the first and most important step to take is to realize that this doesn’t mean you are a failure. You can do this most effectively by looking and the steps and choices that took you to the point of wanting to move away from copy trading. Now the details can vary between individuals but the turning point for the vast majority will come when they believe they stand to make more than they currently do.

Moving Up the Ranks

The first solution that should come to mind, long before you are looking at taking on the task of streamlining your own plan is to look at traders who are turning over a higher percentage profit. It is unlikely that you would have been following the most profitable trader available for copying so if a higher profit is what you are after but you’re not ready to go it alone, just find another trader who can deliver this for you. Now undoubtedly a higher profit will come with higher levels of risk so it’s important to pick a risk level that you are comfortable with and that fits with the amounts of cash that you are able to invest. Leverage multiples, frequency of positions opened, number of open positions at any one time, and many other factors need to be taken into consideration when switching. Moving from a lower risk trader to copying one with higher risk is not as big a move as implementing your own trades but it should be approached with the same methodical steps to ensure you are ready for the move. As with the trader who goes from copying to lone trading, try splitting your capital into two or even three pots. Place each into accounts that are following traders who run at different risk levels and track the results as a week, fortnight, or even month unfolds.

After all, doing so will be a form of taking back control of your trading activities and while it isn’t at the level of going it alone, it will certainly satisfy that need to feel like you are more in control of where your money is going and how it is engaging with the market.

Target Rewards

For some traders, it will never be enough until they are completely managing their own portfolio. If this is you but you were smart enough to realise in the test stage that you weren’t ready to go it alone just yet then taking on a different trader to copy might just not be enough to do it for you. This doesn’t mean that you have to force yourself into breaking from copy trading. Always remember that you wouldn’t be in the position you are in now without the lessons learned and money earned from copying so give it the credit due and don’t be too proud to keep learning through it.

The targeted rewarding system is a way for you to be taking proactive steps towards greater personal control over your own trading but while once again protecting yourself and not exposing yourself to too much unnecessary risk.

In the testing stage, you will have set out targets and then have feedback as to how those targets were not met. The question to look at now will be rather why they were not met and then what must be done differently to achieve them. Sometimes this will mean greater self discipline in executing entry and exit points, at other times it may involve avoiding the trading news and event forecasting of particular sites. In extreme occasions it might even mean moving away from particular pairs and focusing solely on others. Whichever it may be, the target rewards system is a gradual and much slower approach to transitioning from copy trading.

Once you are comfortable that you understand why and where you failed and then what needs to be done to change things around, the next step is to move to starting with a very nominal amount of capital, we’re talking 5% or so here. It may seem ridiculous but it will protect you in the long run. The way the system works is simple, each week you successfully implement the changes as per your test feedback, you can reward yourself by increasing your pot and subsequently your trades by 10%. However each time you fail to meet the changes you have set for yourself, you have to be strict in reducing your pot and equally your trades by 10%. This way, as you get better and more disciplined you are given more money to invest but if you have wrongly entered this scheme too early, you will eventually end up with nothing in your autonomous account and everything back in your copy trading account.

The Long Term Goal

I’ve mentioned a few times the importance of remembering the benefits you’ve gained from copy trading. I do so again to illustrate this final, if perhaps most important point. The key to coming out on top with Forex trading lies in always focusing on the long term, end goal and taking strides towards it with your best foot forward. That is to say, you should always be using your strengths to get to where you want to be. For the majority of people, Forex trading is about financial freedom and increased earning potential, it is not about becoming an authoritative voice in world economics and macro and micro financial triggers. No matter what the reason that you feel like you can/should/need to take a step from copy trading to solo activity, take a look back at the reason you started trading, compare that to the position you are in now, and ask yourself how much it is a business decision rather than one of pride.

If you are on track or are in a position better than you’d planned, why even change at all?

Post a comment down below and let me and other readers know if you’ve recently switched to manual trading or planning to do so in near future?


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.

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