The world of trading is often seen as a big and intimidating one. There are so many different commodities, currencies, and cryptocurrencies to trade that it can be difficult to know where to even start. Once you have chosen your specific market, it is even more daunting to know how to start and what strategy to use.
The scary part about trading is that when you are still new and beginning, you are going to make mistakes, but these mistakes will cost you — and they will cost you real money. Having an inexperienced strategy that you are not too strong with means you will probably lose more than you make.
This means pushing through the hard times to get better — but it does not necessarily have to be like that. In all the trading strategies out there, there is one that is aimed at newbies who want to watch, and learn, how to get better and make money at the same time — this is known as mirror trading.
Mirror trading is a method of trading when a trader — usually a newbie — sets up a strategy that is modeled off successful and experienced traders to mirror them on their own accounts. Essentially, the new trader is copying the moves of the experienced trader and reaping the rewards.
This strategy only came about in the last 20 or so years and has been more applicable with the growth of digital trading. This strategy selects high-performing accounts ona platform to mirror and whenever they carry out a trade, this is also executed in your account.
As briefly mentioned above, mirror trading is essentially hard-copying a successful trader’s moves on a certain market in your chosen mirror trading platform. Most digital platforms today allow you to see who is trading what, and how well they are doing, so mirror trading plays into that.
When you decide to mirror trade you are essentially aligning yourself to the movies that another trader makes. This means that your account ties into their trades and executes the same trades. This allows you to decide the type of trader you like as well, be they risk adverse or high risk.
When the chosen trader executes their trades, these trades are duplicated in mirror traders’ accounts using automated software that operates 24/5 with the intention of replicating similar results.
Mirror trading only emerged in the early 2000s, and was only originally made available to institutional traders, but the growth of trading and the digital realm of trading has opened this up and made mirror trading simple for all users.
Mirror trading is easily enacted with digital trading as there is automated software that can allow traders to set up the mirror on their chosen expert trader. This means that once this strategy is chosen, and the trader selected, the mirror trader needs simply sit back and watch the trades operate without any input from themselves.
Mirror trading is often lumped together with copycat trading, and social trading — while these are all quite similar in essence, there are distinct differences. This is the only one that uses actual mirror trading software, or mirror trading systems to copy the trade in real time for the mirror traders while the other two are much looser and based on following advice more than direct mirroring.
It should be clear now why mirror trading can be an advantage to a trader, it requires very little work or research, and this is also good for new traders who don’t want to lose money while learning the ropes. However, there are also disadvantages that need to be considered.
Mirror trading is not a magic bullet of trading, it has its limitations as the effectiveness of the trader being mirrored can wear out and losses can occur, this can also lead to higher risk that as originally meant to be avoided.
However, with mirror trading all emotion is taken out of the equation and laid at the hands of a more experienced and successful trader who is probably more adept at sticking to their strategy and mastering their emotions.
There are a number of other strategies that can be more successful than mirror trading in the long run, but they will require more time and effort, and experience.
Mirror trading is something that has emerged for the new digital age of trading. It is a strategy that only really works in digital trading, but also one that suits this digital age. Traders of today like quick results, easy trades, and low effort — as well as new markets.
To meet the demands of these traders mirror trading suits. It is a good way to enter a new market, with low effort, and a way to learn without imparting emotional trading. However, it is not the secret weapon to guarantee the best results.
Mirror trading has its place in the trading ecosystem, but it also has times where it is probably the wrong choice. It is more about finding out what suits you, and when.
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