CopyTrader is an innovative tool that allows you to automatically copy the trades of experienced traders into your own trading account. Let’s take an example of how it works for the EUR/USD currency pair:
Suppose you are an investor interested in trading the EUR/USD currency pair, but do not have enough experience or time to analyze the market and make trading decisions. In this case, you can use CopyTrader to copy the trades of a professional trader who already has a proven track record of success in that currency pair.
First, you need to find a trader to copy. The CopyTrader platform usually lists the available traders to follow, showing their performance statistics, trading history and other relevant details. You can choose a trader based on your preferences and investment goals.
After selecting the desired trader, you need to set up CopyTrader to start copying your trades. You can set the amount you want to invest and other relevant settings such as stop loss and take profit levels.
From that moment on, all trades that the chosen trader opens on the EUR/USD currency pair will be automatically replicated in his trading account. This means that if the trader opens a buy position on EUR/USD, the same position will be opened in your account based on the settings you have set.
CopyTrader continues to copy the trades of the chosen trader in real time, allowing you to track performance and results directly on your trading platform.
It is important to note that while CopyTrader can be a useful tool for those who wish to follow experienced and successful traders, there are still risks involved. Financial markets are volatile and trades can lead to losses, even when copied from successful traders. Therefore, it is critical to understand the risks involved and be prepared for possible variations in trading performance.
100 shares of a company in the amount of R $ 50.00
Suppose an investor bought 100 shares of a company worth $50 each on a given day. He made this purchase because he believed the stock price would rise in the short term.
The next day, the investor noticed that the share price rose to $60.00 each, and he decided to sell his 100 shares in that amount. That means he sold the shares for $6,000 in total.
The difference between the purchase price (R$50.00) and the sale price (R$60.00) is R$10.00 per share. Therefore, the investor made a profit of R$10.00 per share multiplied by the number of shares (100), which totals R$1,000.00.
In this example, the investor bought the shares on one day (value x) and sold them on another day (value y), making a profit of $ 1,000.00 with this operation. This is a short-term strategy known as “trading”, in which the investor seeks to take advantage of daily price variations to make quick profits. It is worth mentioning that, as with any investment, this strategy also involves risks, as the stock price can both rise and fall in a short time.
Euro and US Dollar
Suppose an investor wishes to trade with the EUR/USD currency pair, which represents the relationship between the Euro and the US Dollar. On a given day, the investor notes that the EUR/USD exchange rate is at 1.20, which means that 1 Euro equals 1.20 US Dollars.
The investor decides to buy 1000 Euros at that time, thus spending the equivalent of 1000 x 1.20 = 1200 US Dollars. He believes that the Euro will appreciate against the Dollar in the short term.
The next day, the EUR/USD exchange rate rises to 1.25, i.e. 1 Euro now equals 1.25 US Dollars. The investor decides to sell his 1000 Euros at this price. With the sale, he receives 1000 x 1.25 = 1250 US Dollars.
The difference between the purchase price ($1200) and the sale price ($1250) is $50. Therefore, the investor made a profit of 50 Dollars in this exchange operation.
In this example, the investor bought Euros on one day (value x) and sold them on another day (value y) for US Dollars, making a profit of 50 Dollars. It is worth mentioning that exchange rates are subject to constant fluctuations due to economic and political factors, which can lead to gains or losses for investors operating in the foreign exchange market. Therefore, it is important that the investor is aware of the risks involved and has a proper risk management plan when operating in this market.
Forex and stock traders are two types of investors active in the financial markets, each with its own specific characteristics:
- Forex Trader: The Forex Trader is an investor who trades in the foreign exchange market, also known as the Forex market (Foreign Exchange). In this market, traders buy and sell currency pairs such as EUR/USD (Euro/US Dollar) or USD/JPY (US Dollar/Japanese Yen). The goal is to profit from variations in exchange rates between currencies. The Forex market is known for its high liquidity, 24-hour weekday operation and leverage opportunities.
- Stock Trader: The Stock Trader is an investor who trades in the stock market. In this market, traders buy and sell shares of companies listed on stock exchanges. The goal is to profit from changes in stock prices over time. The stock market is known for offering a variety of companies to invest in and for providing long-term capital growth opportunities.
Both types of traders involve making buying and selling decisions based on technical and fundamental analysis, as well as requiring knowledge and understanding of the financial markets. While Forex traders focus on currency fluctuations, stock traders seek to understand the performance and health of the companies whose shares are being traded.
Importantly, both Forex trading and stock trading involve significant risks, and investors should be prepared to deal with market fluctuations and have a proper risk management plan. In addition, it is critical to gain knowledge and education about the markets before you start trading in order to make informed decisions and increase the chances of success as a trader.
Leveraged trading is a strategy used by investors in the financial market, in which they trade with an amount that exceeds the amount available in their account. This operation is possible through the use of margin provided by the broker.
By trading leveraged, the investor may have exposure to a larger volume of assets than the value he has in his account. For example, if an investor has $1,000 in his account and trades with a leverage of 1:100, he may have a total exposure of $100,000 in assets.
Leverage allows the investor to extend the possible gains based on the total value of the position, since profits are calculated based on the total volume traded. However, it is important to understand that leverage also increases risks, as any unfavorable market movement can result in significant losses.
For this reason, trading leveraged requires a high level of discipline, knowledge and risk management. It is critical that investors understand the risks involved and are prepared to deal with market swings. Using leverage can be a powerful tool to maximize gains, but it is essential to use it responsibly and within the limits of risk tolerance of each investor.
Trading leveraged is, in a way, like borrowing money from the brokerage. When you trade leveraged, the broker allows you to trade with a higher value than what you have in your account, thus expanding your investment capacity.
The broker provides a margin (or limit) for you to trade leveraged. This margin is a percentage of the total value of the position you want to open. For example, if the broker offers a leverage of 1:100 and you have $1,000 in your account, you can trade with a total exposure of $100,000 (100 times the value of your account). In this case, you would be borrowing $99,000 from the broker to trade with that leverage.
However, it is important to point out that although the broker allows you to utilize leverage to trade with a higher amount, you are still responsible for any losses that may occur in trading. If the market moves against your position, your losses will also be magnified proportionately.
Therefore, leveraged trading can be a risky strategy and is recommended only for experienced investors, who understand the risks involved and know how to properly manage their positions. It is essential to have a solid risk management plan when trading leveraged, to protect your capital and avoid significant losses.
Let’s assume that you want to trade leveraged on the EUR/USD currency pair with a leverage of 1:500. In this case, you have $1,000 in your trading account and decide to utilize all the available leverage.
With the leverage of 1:500, you will be able to open a trading position worth $500,000 (500 times the value of your account). Remember that this is a greater exposure than the amount you actually have in your account.
Suppose the current EUR/USD exchange rate is 1.2000. You decide to enter the buy operation (long) to take advantage of a possible appreciation of the euro against the US dollar.
With the leverage of 1:500, you only need to set aside a fraction of the total position amount as margin, which is determined by the broker. Suppose the margin required for this trade is 0.2%, which means that you need to have only $1,000 x 0.2% = $2 in margin to open the $500,000 position.
If the EUR/USD exchange rate rises to 1.2100, you decide to close the position and make the profit. The difference between the buy price (1.2000) and the sell price (1.2100) is 0.0100, i.e. 100 pips.
To calculate your profit, you use the formula:
Profit = (Position size x Price change) / Contract size Profit = ($500,000 x 0.0100) / 1 Profit = $5,000
In this example, with a leverage of 1:500, you were able to make a profit of $5,000, even though you only had $1,000 in your account. However, it is important to remember that in the same way that profit can be magnified with leverage, losses are also magnified, so it is essential to operate with caution and properly manage risks when trading leveraged.
We will repeat the example assuming that the value of EUR/USD rises from 1.2000 to 1.3000.
With the leverage of 1:500 and $1,000 on your trading account, you decide to open a long position worth $500,000 (500 times the value of your account) with a margin of 0.2%, which corresponds to $2.
Suppose the EUR/USD exchange rate rises to 1.3000. In this case, you decide to close the position and realize the profit. The difference between the buy price (1.2000) and the sell price (1.3000) is 0.1000, i.e. 1000 pips.
To calculate your profit, you use the formula:
Profit = (Position size x Price change) / Contract size Profit = ($500,000 x 0.1000) / 1 Profit = $50,000
In this example, with a leverage of 1:500, you were able to make a profit of $50,000 even though you only had $1,000 in your account. Remember that leverage can magnify both profits and losses, so it is critical to operate responsibly and properly manage risks when trading leveraged.
When you carry out a leveraged trade, it is essential to use stop orders to manage the risks and protect your capital. The stop is an automatic order that you place on the trading platform to close your position when the market reaches a certain price level predetermined by you.
There are two main types of stop orders that you can use:
- Stop Loss (SL): It is an order to limit losses on a position. When you place a stop loss, you determine the price level at which you want to exit the trade if the market moves against you, thus reducing your losses.
For example, if you bought EUR/USD at 1.2000 and set a stop loss at 1.1900, your position will be automatically closed if the price drops to 1.1900, limiting your losses to 100 pips.
- Take Profit (TP): It is an order to secure your profits on a position. When you place a take profit, you determine the price level at which you want to exit the trade if the market reaches its profit objective.
For example, if you bought EUR/USD at 1.2000 and set a take profit at 1.2200, your position will be automatically closed when the price reaches 1.2200, thus guaranteeing a profit of 200 pips.
These stop orders are automatically executed by the broker as soon as the market reaches the price specified by you. It is important to remember that stop orders do not guarantee an exact price execution, especially in situations of high volatility or market gaps. Therefore, it is critical to choose appropriate stop levels and regularly monitor your positions to adjust the stops as needed. The proper use of stop orders is an essential practice for efficient risk management when operating in the financial market.
Let’s take an example of a leveraged operation with the value of the loss.
Suppose you decided to trade EUR/USD leveraged at 1:500, and you bought 1 lot of EUR/USD at 1.2000. This means that you are trading with a value of 100,000 euros (1 lot) using only 200 dollars as margin (100,000 / 500).
Now, imagine that the market moves against you, and the price of EUR/USD drops to 1.1900. You decided to place a stop loss at 1.1880 to limit your losses.
In this scenario, the difference between the buy price (1.2000) and the stop loss price (1.1880) is 120 pips. Each pip in this case represents 10 dollars (100,000 * 0.0001).
Therefore, the injury value would be calculated as follows:
Loss = Number of pips * Value per pip Loss = 120 pips * 10 dollars per pip Loss = 1200 dollars
Thus, in this example, the operation would result in a loss of 1200 dollars, which would correspond to about 6 times the value of its initial margin (200 dollars).
Follow a successful trader
Following a successful trader nowadays is an excellent way to take advantage of the knowledge and experience of financial market professionals. One of the most popular and affordable options is through PAMM (Percentage Allocation Management Module) accounts, due to their simplicity and practicality to get started.
Many PAMM accounts require a minimum investment amount starting at $5000, which can be a hurdle for some investors, especially beginners. However, there are strategies available that allow you to start with an initial investment of just $50, which is great for those who want to gain experience in the market without the need for a large initial capital.
The brokerage Alpari stands out in this sense, offering the opportunity to invest in different strategies through PAMM accounts with low initial investment. One of the strategies worth mentioning is Fortunadozer, which has proven effective and consistent over time.
By following a successful strategy through PAMM accounts, investors can diversify their investments, track the performance of the professional trader and have the possibility of obtaining attractive returns in the financial market. It is important to remember that, despite the promising opportunities, every investment involves risks, and it is essential to choose strategies that are appropriate to your investor profile and financial goals.
It is recommended that investors conduct a careful analysis of the available strategies, research the brokers and traders that offer them, and seek professional financial guidance to make informed decisions and achieve positive results in their investment journeys.