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AI FAE TRADINGGRUNDKURS KAPITEL 12
Copy trading
Why we advise against copy trading – A critical look on scalability, dependency and hidden benefits for traders
introduction
Copytrading, copying other people’s trading strategies Trader, is often marketed as an easy entry into the world of trading. But behind this attractive facade lie some critical aspects, investors should know. Here we discuss why we are Scalability issues, high dependency and potential hidden Advantages that copy traders enjoy, advise against copy trading.
The limits of scalability in copy trading
At first glance, copy trading seems to be a scalable Concept – more capital can be easily distributed to successful traders However, the reality is often different:
- Market liquidity : Large trading volumes of a successful trader can be achieved with little cannot always be copied easily in liquid markets, which can lead to slippage and worse execution prices.
- Performance pressure : More capital means higher expectations and pressure that can affect the quality of decisions. A trader who is dealing with smaller amounts was successful, does not necessarily have to be associated with a large Portfolio achieves the same results.
Dependence on other traders
When copy trading, your success depends directly on the Decisions of others:
- Loss of control : By outsourcing your trading decisions, you give up part of the control over your investment. This can be problematic, especially in volatile market phases.
- transparency and trust : It is difficult to understand the risk management strategies and to fully understand the actual skills of the trader and Many platforms offer only limited insight into the actual trading activities.
Hidden advantages for copy traders
Copy traders can be preferred by brokers and platforms be treated, which is often not obvious:
- Commissions and fees : Traders who provide their strategies, often receive discounts or bonuses based on the volume of copied trades. This could tempt them to trade more than is possible purely would make sense for investment reasons.
- Competitive pressure : To be at the top of the platform rankings, traders could pursue riskier strategies that lead to better short-term results but could be risky in the long term.
Conclusion
While copy trading at first glance has many advantages offers access to experienced traders and potential profits without deep understanding of the market, the risks and problems should not be underestimated. The dependence on others, the limits of scalability and last but not least the potential conflicts of interest are serious considerations that investors should hire.
Investors who have sufficient knowledge and the necessary time, could consider investing directly or alternative, to choose more transparent and controllable forms of investment. In any case it is advisable to conduct a thorough due diligence check and to be clear about all aspects of copy trading and the respective platform before you decide to entrust your hard-earned money.
Fraud warning
Unfortunately, fraudsters often find their victims in this environment. We educate and hope that we reach many people before they be lured by dubious offers and then their hard lose the money you have earned. To prevent fraud, we have our own blog Area set up in our club https://member.ai-fae.org/de/?refs=70
Pay attention to the following criteria to protect your money:
-Is your contact real or is it possibly a fake profile?
-Should they transfer money to any platform?
-Do you receive services or goods only because of Arrangements, possibly by advance payment?
-What does the Internet search for the product on offer result in or service?
-Are you lured with extreme returns? Eg 5% every Day.
-Is there an imprint, a CEO and a verifiable commercial register number?
-Do you have to pay money in advance or in monthly installments?
Conclusion and outlook on the world of trading
We hope that this introduction to trading will help you to be prepared for the topic of stock market. In order to be profitable in the long term Trading on the stock exchange requires profitable strategies and the right Mindset. Both will soon be awarded by the AI Finance Association with made accessible through cooperations and by AIFAE’s own members.
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