What is Forex Mirror Trading?

Recent years have seen a rise in forex and stock mirror trading, allowing those who do not have a lot of time to benefit from others' experience. Early in the 2000s, mirror trading was introduced in the foreign exchange market. In contrast, the equity market took a while to adopt the practice.

The concept of mirror trading is straightforward: You connect your account to another account run by an experienced investor and have it replicate the activity in yours.

In this way, whenever the experienced investor executes a trade on his/her account, it duplicates or “mirrors” on your account. To put it another way, being a novice, you cannot know what moves to make, and copying successful traders' moves will boost your profits. In some cases, this type of strategy is referred to by some as copy trading, but the terms are used interchangeably.

Depending on the brokerage that you are using, you can choose to follow and link your account to anyone that you like. Anyone who is interested in copying the strategies of other market participants can view their features and results in the trading platform of their broker. Afterward, they select one based on their trading goals, style, capital, risk tolerance, etc.

Is Mirror Trading Legit？

The mirror trading strategy is a strategy employed to mimic a chosen individual's trading strategy or an automated trading bot's algorithm in which trades are executed automatically. This has nothing to do with the South African scam site uncovered as fraudulent by 'Mirror Trading International'. There is no pyramid scheme associated with Mirror Trading.

Mirror trading does not operate as a pyramid scheme. Rather, it is a legitimate strategy you can use in any market. Some companies promote mirror trading, which creates confusion. Although not all companies are reputable, the strategy itself is solid and legitimate.

As with traditional trading, mirror trading has an equal risk, so investors should always do in-depth research before authorizing trades automatically. Fortunately, there are ways to boost your potential profits. Consider, for example, an EA or master trader with a proven track record that has been thoroughly backtested.

How does Mirror Trading Work？

Each broker operates differently when it comes to mirror trading. Usually, they will provide a mirror trading feature, like the copy trader offered by eToro. Successful traders, called 'Masters,' will show their account results. Choosing a Master trader that matches your preferred asset (such as forex, stocks, indices, commodities, and more), your preferred trading style (day trading or swing trading, for example), and ultimately, your risk appetite is crucial. Then you can link your account to theirs, ensuring you follow their trades exactly.

The other type of mirror trading involves a bot, also called an Expert Advisor (EA), which executes trades for you using algorithmic logic. The automated trading system will make a trade when market data suggests a pattern or trend is developing. It can usually be downloaded to your account on most platforms.

Multiple regulatory bodies around the world regulate the practice of mirror trading. Brokers that provide mirror or copy trading must adhere to appropriate regulations under the Financial Conduct Authority's (FCA) and ESMA's MiFID directive, which means they must comply with the FCA and ESMA's rules.

How to Start Mirror Trading？

First of all, you must choose a broker that offers mirror trading. Some popular options include JFD bank or eToro. Choosing a provider that offers positive customer reviews, quick and convenient withdrawals, and strong customer support would be a wise choice.

Secondly, your broker may offer mirror trading via a third-party platform, such as MetaTrader 4, in which case you must download the platform from the broker's website or use the webtrader. There are many brokers who offer mobile apps that let you monitor the performance of your portfolio in real-time. It is particularly helpful for mirror traders who want to see how their automated trades are doing.

Thirdly, think about this: would you rather follow successful traders or rely on an algorithm that focuses solely on data trends？ Every choice has pros and cons. A trader should also have a profit motive, so that he can avoid losing money. As opposed to humans, algorithms remove all emotion and can spot trends earlier than them.

Fourthly, you need to assess the risks before trading with real money. Select a successful trader who has similar views to your own to avoid a conflict of interest.

Finally, you should never invest real funds in mirror trading until you have fully analyzed the success of the method. Before implementing an EA, it is recommended to test it on a demo account. Before purchasing, you should also be able to see the latest backtesting results. An absence of backtesting data is a major red flag because it indicates the algorithm is not proven to be profitable. It is important for a Master Trader to have a proven track record of success, with low drawdowns, over a sufficient period of time.

Copy Trading vs. Mirror Trading: What Are the Differences？

As the name suggests, the strategies mirror trading, copy trading, and social trading are all used in the same manner: that is, traders copy the techniques and strategies used by some professional or experienced trader. Both variants, however, have their own differences when it comes to their implementation.

Mirror Trading. In this case, the ‘original’ trader programs and hosts his strategy directly on the server of the company providing this service for replication by others. The traders in charge of facilitating the strategy must know how to program, in order to prepare signals that can be replicated in a client's trading account.

Copy-trading. By setting up a connection between their trading accounts and the platform of the brokerage firm providing the service, traders can become copy traders, and in so doing, they become signal providers. Mirror trading and copy trading strategies are equally effective whether they are used to trade foreign currencies or other markets.

Mirror trading does not work this way, since the company does not store the strategy on the company's server, but instead hosts it on its own server, but instead hosts it on its own server, which it then sends to the trading platform, where it is transmitted to the client's trading account by the broker.

This means that any client who follows this strategy can also become a copy trader.

There is also a large difference in time lag as well. The time it takes a money manager to acquire or dispose of a stock, and when the information is made public for a copycat investor, is weeks. A mirror trade allows this time lag to be virtually eliminated. Orders received from portfolio managers and orders from mirror account holders are gathered together, and they are sent to the exchange one batch at a time.

Where You Can Use Mirror Trading？

Mirror trading is commonly used by forex traders. Forex trading involves trading currencies, for example, EUR/USD. Because you're dealing with leverage frequently, you have to make sure your strategy is on point. In order to earn money, if you are a newbie, modeling a successful strategy can be helpful to you.

In any case, if you are a mirror trader, you are able to use mirror trading in any market. The stock market is one place where mirror trading is extremely popular. You can also use mirror trading if you are involved in cryptocurrency trading. Initially, mirror trading could only be accessed by institutional investors, but now it has become available to all traders and investors as part of digital platforms.

Best Platforms for Mirror Trading

With Mirror Trader, you can copy trades of experienced professional traders using an easy-to-use 'social trading' solution, which is ideal for starting investors who want access to sample portfolios, strategies, and investment ideas.

Mirror Trader is a trading platform developed by Tradency, which has a decade of experience behind it. Tradency became best known as one of the premier social trading platforms by developing a user-friendly and easy-to-use trading platform that is sophisticated and refined. Tradency Mirror Trader makes the process of mirroring trades simple with just a few clicks, and more recently, with a few taps. Mirror Trader offers great opportunities since it provides real-time signals and many tools for evaluating them in the current market environment. Thus, Mirror Trader isn't merely an automated trading system, but rather enables comprehensive trading, with the trader deciding what works best.

With Mirror Trader, you can choose from several trading methods. Of course, the most famous of these is automatic trading, which lets you mirror all the trades that signal providers make to your Forex account automatically. Semi-automatic mirror trading lets you see the signals of your choice and decide in real-time which ones you want to follow. With many built-in charts, you'll get insight into all major indicators, and you can monitor and modify your strategies based on detailed strategy summaries.

With manual trading, you will be able to execute trades on your own, just as you would with any Forex trading platform, with access to trading signals by filtering and applying strategies tailored to your style and current market conditions.

Mirror trader Forex trading platforms include AvaTrade (AvaTrade provides MetaTrader and proprietary AvaTrader platforms as well as signals and automated trades via Mirror Trader), XM, FXTM, FXDD, FBS, and others.

Pros and Cons of Mirror Trading

Pros of Mirror Trading

Newbies will find it useful. Any new trader faces the challenge of getting their trades right when they are starting out. An innocent mistake can cost you a significant amount of money. The best way to avoid making those mistakes would be to follow the trades or strategies of a successful trader.

Experience is not required. The advantage of mirror trading is that it allows you to get started without any prior knowledge.

It does not involve a learning curve. Additionally, you won't have to undergo a learning curve before you succeed. It takes experience and a learning curve before you become an expert in most trading strategies. The problem is that during this phase, you're at risk of losing all of your investment.

It isn't very expensive or time-consuming. Getting a good program shouldn't cost you too much as long as it's good. With this approach, you can invest less money at the beginning and increase the size of your business gradually. Since you will be trading with a strategy that is tried and tested, you are extremely likely to earn a profit.

Feelings can be left out. Successful traders never listen to themselves when trading. In contrast, as a novice trader it is easy to get caught up in emotions of greed or fear of loss instead of following the trading strategy you are supposed to follow. Mirror trading does not involve manual intervention, since it is automated.

Cons of Mirror Trading

Choosing the right trader is crucial. When you decide to mirror other successful traders, it is important to choose the proper trading strategy. Making the wrong decision can cost you money. With a good trading program, you will not struggle.

Changes can be made to your style. Everyone has their own personal trading style. As time goes on, you may discover that your trading style differs from the one used by the trader you are mirroring. When this happens, it may then be necessary to move on to a new trader.

Time delays must be taken into account. If you are entirely copying another trader's trades, you need a program that reduplicates the trades immediately. During volatile periods, your mirror trading strategy can suffer a slight delay and cause you to lose all your money. Therefore, it is imperative to copy trades in real-time in order to protect your capital.

Since they have only recently entered into the market, there is a lack of historical data that can be analyzed regarding the performance of portfolio managers and other traders who allow investors to mirror their accounts.

Almost all performance records began after 2009, when the bull market began, so investors do not know how these supposed experts will perform in a severe bear market.