Copy Trading for Beginners: Is It Really Worth It?

This Copy trading for beginners’ guide includes my personal experience with copy trading, the important things you need to know before starting, and the steps on how to get started with it.

Disclaimer: The purpose of this article is to inform and educate fellows who wish to know more about the basics of Copy Trading. I am no financial advisor and I do not recommend testing the depth of the water with both feet unless you’ve made in-depth research about the adverse effects of trading. This is a high-risk type of investment. In fact, 66% of traders lose their capital in CFDs.

Also, please note that this post may contain affiliate links. Any sales made through such links will reward me a small commission – at no extra cost for you. Still, everything you read in this blog is based on my unbiased verdict towards the products or services mentioned.

Steve and Dave use eToro to invest…

Oops. SKIP. Sorry not sorry.

How many times did that youtube ad annoy you? Or shall I say, how many times did you hit that SKIP button?

Since you’re here anyway, consider yourself lucky because I want you to finish that one-minute video.

Nope. let me rephrase that. I NEED you to finish that one-minute video.

Disclaimer: There’s no SKIP AD here. Sorry.

Dave is still earning by copy trading Steve while doing the things he loves to do.

Basically, that video pretty sums up what COPY TRADING is all about.

So even if you’re not a trader, you can still earn profits from copying other traders.

Now, before anything else, I would like to tell you why it is worth knowing copy trading. Otherwise, going through this whole post would be useless.

And I will start this by assessing whether it is really profitable or not.

Is Copy Trading profitable?

If you’re not yet familiar with copy trading, try going back to Steve and Dave’s video.

But on the serious note, copy trading is a type of social trading that enables you to imitate the trade positions of a master trader. If you want to trade but you just have no time to learn and do the trades yourself, then copy trading might be for you.

In copy trading, everything is automated so you don’t have to monitor it all the time. Well, you can, if your safe a$$ can’t help but get excited with the gains (or losses).

But this is just an overview. I have a whole section explaining copy trading later.

But the short answer is YES, copy trading is indeed profitable. In fact, having at least 10% ROI a year is very attainable. You can even have your capital doubled in a year or less!

Sheila
The beautiful and witty author of Pinay Teenvestor

Now, let’s take a look at Etoro, one of the best copy trading platforms’ top and profitable master traders to copy.

I have sorted them from the traders with the least risky approach to the ones who trade with the highest risk but are still profitable in this craft.

This is the basis of my criteria:

1. Drawdown stats and steadiness of profits,
2. Risk level (1-10 from lowest to highest),
3. The length of trading history,
4. The count of current copytraders.
   
   

Take note that the figures I am going to show you are the historical profits of the best performing traders. Their past performances, however, are not strong indications of future results. This is not investment advice.

Best eToro Traders to Copy In 2020

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See the latest profitable eToro Traders HERE

If you have no account in eToro account yet, you’ll receive $50 once you signup on my link and make your first deposit. SIGNUP HERE.

You can also create a DEMO account from the same link and will still be eligible or the SIGNUP BONUS once you decided to make a deposit.

DISCLAIMER: 62% of retail CFD accounts lose money. Copy Trading cannot be construed as financial advice. Use at your own risk and you are liable for losses incurred.

Is copy trading worth it?

I know. The figures above must have hooked you, haven’t they? Of course! I mean, who wouldn’t? You never get that ROI by parking your moolah in banks or bonds.

Still, the question remains, is copy trading really worth it?

Well, 62% of trading accounts lose money. And currently, I belong to that 62%.

And here’s my story.

I started my trading journey last 2017. I first traded cryptocurrencies, then stocks, then forex. Quite a leap, I know. But right now, I am sticking to forex for short-term and cryptocurrencies for the long term. 

Though I trade on my own, I still invested in copy trading. Apart from being curious whether it is more profitable than actually trading on my own, this is also my way of diversifying my investment portfolio.

Actually, I researched copy trading for months before investing in it. In fact, I made an article about it months ago.

I researched for the best traders to copy on eToro based on my risk appetite. I checked their trading history and risk performance. Actually, I have saved a couple of best profiles already until I made my first copy trade investment last February 2020. 

You’re curious about how it turned out, aren’t you? Well, here it is:

To date, my losses have totaled 34.35% of my total capital! Yeah, you read it right. Despite my research efforts, I still incurred losses!

The master traders I copied have unbelievably good trading history and risk score until the pandemic happened.

In fact, NuclearNicDev had traded with a 300% profit for the year 2019. misterg23, on the other hand, had consistent profits with a very minimal risk score. 

Yet in spite of their good trading histories, I was still able to get huge losses by copying these two.

This just proves that historical trading performance does not guarantee future results.

And I want you to read that once again before throwing your hard-earned money down the drain.

But I honestly think I just started my copy trading journey at the wrong time when the COVID crisis had shaken the global market crazily. Also, I must admit I started my port with the traders who have medium to high risk tolerances. And as a rule of thumb, high returns always comes with a high level of risk. If you’re still a beginner, I strongly suggest not to do the same mistake I did. Always start with traders who have a low-risk profile.

Yet despite the current situation of my copy trading portfolio, I am still in for the game. I am a trader myself and I know how hard it is to beat the market especially in times of drastic movement like what is happening during a crisis. 

Besides, I made sure that the money I am putting in this portfolio is what I consider “disposable”. Simply, it is the amount I am willing to risk for the great rewards I could possibly have.

So is copy trading worth it?

It actually is! Once again, look at the figures of the successful traders I have shown in the previous section. But then again, trading is a risky investment. Yet having no knowledge of what you’re up to is even more riskier!

Now, if you think you can barely take any losses, then I’m afraid this type of investment is not for you. I suggest looking for other types of investments that suit your risk appetite instead.

But if you’re an aggressive type of investor who understands the concept of trading, then read on. There is more to know than looking at the figures I presented lately.

Things to Consider before investing in Copy Trading

A lot of people think that trading is merely putting buy and sell orders then poof, you’ll become an instant millionaire. I used to think (and did) the same way as well. On the contrary, most people are only burning an awful lot of money in the market.

So before delving deep about copy trading, I want you to understand and consider the following:

1. Copy trading is a high-risk type of investment. The reward in copy trading is probably one of the highest out of all passive income investments. Yet as the rule of thumb, the risk is also high. Make sure copy trading is something within your risk appetite.

2. Only invest what you can afford to lose. You can lose all your capital if you’re not careful enough. Make sure to invest the money that you consider “disposable”. 

3. This is a long-term investment. You can’t expect to earn a significant amount by copy trading for days. Know that just like any type of investment, it takes your copy trading portfolio to grow. I highly suggest letting your money sit for at least a year.

4. Know at least the basics of trading. I couldn’t stress this enough but if you’re eyeing on this type of investment, you should know and understand the basics of trading. It is essential to picking the best master trader you want to copy.

5. Build your emergency fund first. This is one of the few things you SHOULD consider before investing in general. Again, copy trading offers no guaranteed results, and just like any type of investment, you cannot just withdraw it in times of emergency. 

Copy Trading for Beginners: The Ultimate Guide

How does copy trading work?

Well, by now, you must have a pretty good idea of what copy trading is. Steve and Dave just made it easier for you to understand.

But if you’re still confused, here’s another video you have to watch. Don’t worry, it’s not about Steve and Dave anymore.

Meet Bob, and he’s Dave’s father 😉

Bob is a food blogger who wants to trade Bitcoin. But he’s just a blogger without any know-how about trading and uhm… he’d rather play with his granddaughter in his free time. So he copied other Bitcoin traders instead.

Perhaps, you’re like Bob, or a younger version who enjoys watching Netflix, Kdrama, and Tulfo while chilling. Trading once piqued your interest but you have eventually given up on it after successive trading losses. 

On the other hand, there’s a trader named Steve. (Well, here’s Steve again!) Steve has been trading for ten years now. He trades forex, global stocks, and even cryptocurrencies. Steve is a fulltime trader and he spends most of his time analyzing the fundamentals and technicals of his trade biases.

Now, if there’s any way to acquire Steve’s knowledge and experience that made him profitable in this craft, would you do it? If your answer is yes, then great to know! 

But the real question is, how willing are you to bleed for months or even years just to become profitable in trading?

Are you willing to sacrifice that much to get close to this virtual gold mine?

If so, I admire your courage. There are lots of courses and online resources to get you started. If not, then you have the option actually. This is the very essence of this post.

That is Copy Trading.

And that’s what Dave and Bob just did! 😉

What is Copy Trading?

Simply, copy trading allows you to imitate the trades of a master trader. Whatever Steve buys or sells will automatically be done in your account as well.


Copy trading allows you to acquire the years of knowledge and experience of a master trader without undergoing the steep learning curve of trading.

Everything is automated so you don’t have to monitor it all the time. Just let Steve, the master trader do his thing. While you, on the other hand, are doing the things you love while still earning. Copy trading is indeed a good (but risky) source of passive income.

How can you earn from Copy Trading?

Remember, you’re imitating all the trades of a master trader so whatever his gains (or losses) are will reflect in your account as well. 

Once you allocate funds to copy a certain trader, your account will automatically imitate the same trade proportion as the trader.


For instance, if Steve uses 2% of his account balance to open a trade, your account will do the same then. Your account will open the same trade using 2% of the overall fund you allocated to that trader. 

Suppose you copied Steve from January to December of 2019 and his overall trading portfolio had a net gain of 100%, then basically, you’ve earned a 100% gain on your capital as well!

Yet on the contrary, if Steve loses 50%, then you’ll lose half of your capital too. 

But don’t worry. You can set a stop-loss level or just simply stop copying Steve if you can’t take further losses anymore.

A Stop-loss level is a certain price level you can set to prevent further losses.

For instance, If you invested $200 and set the stop-limit to $120, the trade automatically closes once your account value goes down to $120.

Advantages and Disadvantages of Copy Trading

What are the advantages of Copy Trading?

1. You want to trade but you don’t have the time. No matter how interested you are in trading, there are still things that you prioritize more than trading.

2. You don’t need a huge capital to start with. You can start with $200 to copy a certain trader. Your capital isn’t necessarily the same with the master trader as trades will be opened in proportion to your account and the account of the one you copied.

3. You can set a stop-loss. You can set up a stop-loss limit of how much losses you can take. I really encourage using this feature to prevent your account from being depleted completely.

4. You don’t have to monitor it all the time. You can actually consider it a passive income. Whenever the master trader enters and closes a trade, it will be done to yours as well since everything is automated.

5. You can maximize returns while minimizing the risk. You can check the best traders with good trading history and best risk scores. This allows you to project the trading behaviors in the future of the trader you want to copy.

6. You can copy more traders as you like. If you want to diversify your copy trading portfolio, you can choose different traders to copy based on different risk levels.

7. You can earn dividends. Global stocks give dividends to their shareholders, so it will be passed on to you as a copy trader as well.  

8. You can save yourself from the stress of trading. As a trader myself, I know that the learning curve in this craft is so steep. But it doesn’t stop there. Trading is a constant battle that needs mental and psychological stamina. And you don’t have to go through all these when you’re copy trading.

What are the downsides of copy trading?

1. Losses are inevitable. As I said earlier, trading is one of the high-risk investments. Even if you have picked the best trader to copy, that does not guarantee 100% profitable trades. 

2. There are fees. There are actually fees, especially when cashing out your earnings. Some copy trading platforms like eToro will not charge you for any trading fees. But they mostly get the commission on the spreads. A spread is simply the price difference between the buy and sell prices.

3. You can lose all your capital if you’re not careful enough. Not being careful means not doing your assignment. And by doing your assignment, it means understanding what trading really is and picking the best trader based on their historical performances.

Why should you do copy trading?

I believe I have laid my points on the advantages of copy trading already. But if you’re a novice trader who is still on that steep learning curve, I recommend trading on your own while copy trading. 

Come to think of it. You can follow or copy traders you want to become. Copy trading platforms are so transparent that every trade made is shown. You can take advantage of it actually. Examine the trader’s entries and exits and learn from those.

But even if you’re an experienced trader, you should still consider copy trading. It helps diversify the risk of your overall trading portfolio. And perhaps, it’ll be fun how your trades went compared to those master traders. 

Is trading hard to learn?

As I said in the earlier part of this article, I started my trading journey last 2017. So basically, I’ve been trading for three years now. 

When I was still a novice in this craft, I really thought everything was easy. I thought I was well equipped enough considering the trading videos I watched, books I read, and the tips I gained from experienced traders.

I engaged myself in every online and offline group I know. But honestly, that only added to the confusion and frustration which ended up to unprofitable trades. It only made me hop from one strategy to another.

It was only last year, in my second year of trading, did my trading results become profitable. You see, trading is more than just putting buy and sell orders. It will greatly toy with your mental and psychological stamina. And until you’re not willing to undergo such a tough process, then you will never improve. 

So is trading hard to learn?

Actually, it is not. And I never realized until recently. Most people are just making things so complicated that they barely take notice of what is truly happening on the charts.

They flood their charts with colorful indicators without looking at what the chart candles, support, and resistance levels tell. And yeah, I was once like that. 

Candles… Support… Resistance… WHAAAAT?

Yeah, I know. Quite complicated, isn’t it?

But the good news is you don’t have to undergo the same phase as I and every novice trader did. Once you understand trading and the risks accompanied by it, you can go pick yourself the best trader you could imitate through copy trading. 

Is Copy Trading legal?

The short answer is yes, Copy Trading is legal. However, there are governing bodies that regulate the act of copy trading. And not every trading brokerage can offer their clients to do copy trading. 

How to Get Started in Copy Trading

Working on your copy trading portfolio isn’t that hard. Just follow these steps:

1. Pick a copy trading platform. One of the best and reputable copy trading platforms I know is eToro. Still, there are lots of options out there, so feel free to choose what you think is the best one.

If you have no account in eToro account yet, you’ll receive $50 once you signup on my link and make your first deposit. SIGNUP HERE.

You can also create a DEMO account from the same link and will still be eligible or the SIGNUP BONUS once you decided to make a deposit.

DISCLAIMER: 62% of retail CFD accounts lose money. Copy Trading cannot be construed as financial advice. Use at your own risk and you are liable for losses incurred.

2. Verify your account. It is required to comply with KYC (Know Your Customer) requirements in every trading broker. 

3. Assess your risk profile. In my experience with eToro, you have to undergo a risk assessment first before you can copy traders. I highly suggest filling out your risk profile as low as possible. Doing this may prohibit you from copying high-risk traders but it will also minimize your copy trading account from exposed market risks.

4. Find the best traders to copy based on your risk appetite. Make sure to examine the traders you want to copy first. Look at their historical performances (at least one year) as well as their risk performance. Take all the time you need in this process until you arrive with the trader who greatly suits your risk appetite.

5. Fund your account. You can start at $200 per trader. But then again, make sure to invest your disposable income for this.

Copy trading for beginners: What to expect?

In the first part of this article, I have already shown you my actual copy trading portfolio. And as you see, it was bad. Even the best traders fail at times and so can you. 

As a beginner, you may fail on making the best choices on which traders to copy. You may even stop following some of them since the losses are already unbearable. But the next thing you knew, they’re back on their feet again. Making up with their losses, and soaring high with profits. While you’re there, coping up with regrets and frustrations.

Well, in trading, everything is possible. I made this article to share as much information as I can on how risky this kind of investment is. Once you’ll get yourself into it, you are already considered a social trader. You may not trade the actual thing, but in reality, you are trading people. And these people may bring fortunes or disappointments to you.

The bottomline is, just don’t expect much. Again and again, trading is one of the riskiest types of investment. You cannot avoid losses. You can only learn how to minimize it by assessing your risk profile and copying the traders within your risk appetite.