Foreign Exchange or Forex trading is a complex discipline for beginners. It will take months to years to comprehend and master a spectrum of Forex trading skills. Professional traders even take more years to earn reasonable profits, but many have given up without achieving anything.
That’s why many people hesitate to start investing in forex trading. They’re frightened with the American god himself, which raises the question about whether you can invest in forex without trading. Fortunately, the answer is yes. You can invest in Forex but not trade it. There are three major non-trading Forex investment solutions: copy trading, trading management services, and becoming a trading consultant.
The most popular way to invest in Forex without trading is copy trading. Instead of trading on your own, copy trading is where you replicate traders’ trading patterns. Even though investors see it as a form of forex trading, you’re not trading from scratch. You’d not have to possess professional trading skills, but you can make some profits from mirroring pro traders’ trading. With minimum experience and crafts, you can earn Forex ROI.
The key to successful copy trading is how to perform it and how to choose a professional forex trader to copy. Investors should note that copying successful trading doesn’t eliminate risks or return you with high profits.
You’d still have to be cautious even though investors researching and trading comprehension don’t demand it in copy trading. There’s no guarantee that you’d earn the same profit rate, but you do have opportunities to secure profitable trades when done correctly.
Failing to choose an excellent trader to copy can be disastrous to your Forex investment. Take some time to research top or successful traders, especially about their stats and average performance. Doing this research will give you a comprehensive overview of which traders can provide you with sustainable profit. Therefore, you can copy them.
Advantages of Copy Trading
Trading platforms that host copy trading provide both copiers and copied traders to benefit from the activities. Before we go to our tips, let’s highlight what advantages you can enjoy from copy trading.
- Trading History: Copy trading is a massively growing trading solution built on transparency. All information, records, or trading history are accessible for copy traders. You can access adequate information about the copied traders before you can finally decide the one you can copy.
- Developing Trading Skills: Reading books is okay, but copy trading provides you with real yet practical experience about actual trading. In general, you’d learn their trading patterns about how to profitably secure trading opportunities. Sooner or later, you’d build skills and confidence to trade Forex on your own. Copy-trading could have been the most practical way to learn forex trading for real.
- Passive Trading: With copy trading, you don’t have to trade your money actively, but you can potentially earn passive income if you successfully copy profitable traders.
- Minimum Skills To Go: You can skip complicated aspects of actual Forex trading with copy trading. You also need to choose profitable traders and perform copy-trading depending on the platform you’re using. Each forum may have a different interface even though they work in similar ways.
Tips on Choosing the Best Traders to Copy
Once you’ve joined a Forex trading platform, you should have acknowledged how things work there. You can take advantage of demo mode whenever available. Next, you can start finding traders you’d copy. Hundreds, if not thousands, of traders, are on the platform. Check our tips on choosing the best traders to copy below:
1. Top Forex Traders
You can go straightforwardly to top traders on the platforms. While the site may have its categories based on the trading performance, you can find most followed traders. The number of followers reasonably represents how credible the traders are. That’s also a sign of reliability, continuity, stability, and consistency of their trading performance. Remember, a trader can lose several times and win big bucks one time but who you’re looking for is the one that can provide you with consistent income.
2. Ensuring The Authenticity
Even though powerful trading platforms have a strict policy on bot uses, you’d still have to be cautious with the traders you want to copy. Some fraud traders fabricate their followers to create the bandwagon effect and gain invalid benefits from it. Ensure that the trader’s followers are real humans just like you are.
The establishment of a trader takes time. Beware of new traders with vast numbers of followers as they could be fraudsters. Take some time to monitor their performance and followers before actually copying their trading.
3. Consistent Regular Performance
The best quality of traders is the ones with consistent performance. Listing the most followed traders gives a general list, but you need to specify your search to identify the most consistent and best possible traders to copy.
Consistent performance refers to the balance between gains and losses in a particular period. You can observe their monthly trading performance for an excellent overview and see how consistent the trader’s sales have been. Make a summary or notes on traders you follow.
4. Trading Frequency and Establishment
Consistency and reliability can also be observed based on the trading frequency despite the period. This frequency will inform you of the profit rate if you copy the trading that should ideally be around 70% – 80% based on the significant number of trades they’ve done. On the other hand, you can also check how long traders have been on the platform that reasonably indicates their experience and knowledge. Established traders with consistent performance are the top-notch ones you can copy.
Choosing Established Trading Platform For Invest In Forex
New trading platforms may lure you with bonuses and special offers, but they’re not an excellent choice to start using for copy trading. You’d hardly find experienced traders in new platforms. Generally speaking, traders with experience usually base themselves on established trading platforms and contribute to the trading community. Major trading sites are usually also resourceful for beginners.
It’s okay to take some time analyzing traders for copy trading. Of course, you won’t find traders with 100% gains and no losses. However, it’s possible to find profitable traders with considerably consistent performance. It would reduce and mitigate the risks while providing you with consistent potential income from your Forex investment.
1. Trading Management Services
In many cases, the best forex investment is investing in a professional trader and allowing them to trade on your behalf while earning a monthly profit. What you need to do is to find trustworthy professional traders and share the profit with them. Forex trading brokerage was the most popular choice before copy trading taking the throne.
It could be a daunting task to find reliable brokers who deliver profit. There are frauds and scams as you go online for Forex trading brokers. At this point, you need to consider some factors when choosing a broker or account manager to trade on your behalf.
2. Background and Experience to Invest in Forex
First of all, you should go for experienced traders with a proven background. Forex traders take a long time and high frequency of trades to develop skills. There’s no instant way to become a professional trader. At this point, you should check the traders’ background and their portfolio.
Generally speaking, expert traders usually charge you with higher commission fees, but they would likely secure more money for your Forex trading investment. Don’t risk your money on inexperienced traders or the ones with no background to prove.
3. Amount of Deposit
Typically, brokers or forex investment account managers would require you to deposit the initial capital before they can do Forex trading on your behalf. At this point, you should be the one that defines the nominal you want to invest.
Reputable traders won’t force their clients or investors to deposit a large amount of money initially. Beware of traders that require you to deposit thousands of dollars upfront as they might be frauds. Trading brokerage is a business of trusts where traders put effort into building one.
Respective traders would only need a small investment of $100 to start trading. You can start with a minimum deposit while monitoring the traders’ performance, and you can increase the stake for another batch if you’re satisfied.
4. Forex Trading Commission Fees
Trading account managers would charge you with commission forex trading fees that refer to the trading profits share. Each trader would charge some percentage of the trading profit as their commission. At this point, you need to find the one with the lowest possible percentage fees.
Even though it may vary, a reasonable trading commission fee would go around 25%-30% max. Avoid greed traders that demand 50% shares as it’s not a good sign to invest your money in them. Besides, you’re the one that entirely takes on loss, so you deserve at least 70% of the trading profit. Investors should write all deals in an agreement, but an established trading company would arrange it first before you even suggest one.
5. Advantages of Managed Accounts
Getting your account managed a professional provides you with various benefits, including:
6. Save Your Time and Invest in Forex
Being a Forex investor would consume a smaller portion of time than being a trader. Having your Forex account managed allows you to save time so you can focus on your business routines. If you have two or three hours for trading per day, you’d likely miss many profitable trading opportunities in the active hours.
You need to develop the best forex trading strategies, but it would be impossible if you don’t have time to test and retest ones. A professional trader would take years of active trading experience to develop workable strategies.
Pro Trading Experience
Forex trading account managers are professionals with in-depth knowledge and experience in foreign exchange markets. Established firms have built trust among their clients that also inform you of how they can trade, manage accounts, and of course, generate profits from their trading performance.
Having your Forex account managed professionals, you can lower risks from potential dummy losses. The professionalism, strategies, and ideas for Forex trading typically take a very long time to develop. Managed forex accounts mean working with professionals who employ tested trading strategies. Unlike copy trading, these traders use their experience and knowledge to apply the best suitable method for securing profitable trade.
Their discretion would vary for each client depending on the traded currencies, market movement, and other factors. They’d actively trade your account and capture profitable trading opportunities.
1. Managed but Controllable Forex Account
Many people think that having their Forex account managed means losing control over their accounts, but it’s not true. Reputable Forex trading management services only trade on your behalf but not taking over all controls over your accounts. As the account owner, you’re the one who decides the nominal of the deposit as long as it meets minimum requirements.
You have 100% control over your trading account. The service provider can only perform trades on your account’s behalf, but they will not be able to transfer or withdraw funds from your account. You can start and stop trading on the forex trading management service. Whenever you want to halt the managed service, you can request it so all positions can be closed traders.
If you are interested to get more knowledge about How to manage your Forex Account, then I suggest reading Tips to Manage Forex Trading Risks.
Two major ways to invest in Forex without trading, include – copy trading and managed account service. If you want to learn real trading with lower risk, you may consider copy trading. If you wish for professional traders to trade on your behalf, you may consider opting for a managed account service.