Choosing Traders To Copy Lesson 1

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Lets have a look at picking a trader or traders to copy.

The first two traders I copied I found by searching OpenBook by ‘low risk’, and picked a 100% winner and 97% winner (performance over 3 months). After a couple of days the small profits were coming in – I won’t go into details about amounts and lot sizes, because at the moment, the focus of what I’m trying to do in the first instance is not lose.

Of course Forex is all about cash, but if your learning to surf you don’t jump out of a helicopter and ride a 100 footer, you you learn how to stand up, and stay on the board, and to stretch the analogy further you do it out of water (a Forex Demo Account).

Anyway, the third day, the one trade closed 65 points down, which over an extended period where the trader’s losses are rare is probably quite bearable and will not have too bad an impact on your profit. Anyway, I decided to change Copies, and dropped both of them, (one of whom I may go back to – average 5 bucks a day off £200 investment – you won’t get better interest rates than that!), and decided to revisit the Openbook search.

This time I used the best ranked along the top navigation, and filtered to get 4 100% performers over 3 months. The results (most of them) are below.

copy trader history 27 sep 11

Copy Trader History 26 september

Ok, so let’s take a look at the most important thing first. The gain column shows all figures in green – which means every deal ended in profit – not a bad average.

Ignore the small amount for the moment, instead, focus on the difference in each trade between the spread and the profit. Subtract the spread from the profit to get the net amount of points moved. Some of the moves are tiny, some not, but add them all together and you get a fair amount of points over a couple of days, and remember points make prizes!

Now, if all of these trades were made on a lot size of 10,000 (will go into that another time if you are unfamiliar) this at a buck a point, would be a very nice earner for having done nothing other than follow some reliable traders.

All good so far. This bring us to the next issue. How to increase these profits. There are two avenues, one is to get more in depth with the copy system amounts (you can only use 20% of your overall account). The other is to manually copy trades. Both these will be explored, noted and brought to you in another post – I’m not trying at some cliffhanger effect here, please remember that this diary is real – I wish I had the time to knock it all up overnight but I don’t. See you soon.

Please note, that the above has just shown profit over a couple of days, but there are more. If you are interested, then try the OpenBook and Copy Trader yourself, I’d advise using demo money to start, but that’s up to you, just remember never to stake more than you can afford to lose.

The Copy Trader Experiment

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Welcome to the experiment.  The basis of it is as follows.

  • A newbie tries their hand at Forex trading
  • Copy Trader is used
  • As is manual trading
  • Initially using a demo account
  • To be followed by a real cash account
  • A 1.5K USD account is the initial aim (subject to change)
  • Is Copy Trader a ‘valuable tool’?
  • Is ‘scraping’ a ‘tenable’ strategy?
  • How does the newbie develop a strategy?
  • And much more…

This list of areas of exploration is not exhaustive, and it is likely that more areas will arise (this is a newbie experiment.   This whole blog/project is an exploration, and although it is likely that may end up as something both coherent and useful, it’s direction at this stage is still open.

The platform used for the project is eToro, for the simple reason that they have both the Copy Trader software, and a free Demo Account.  After researching copy trading, there’s one other vendor offering it at the moment – application is by email, and the minimum deposit is 5k – I’m not the type of guy to buy without trying, so being as eToro is free, that’s where this experiment embarks, but if any other platform has something suitable to offer, that will be tested too.