Trading money in the foreign currency exchange market is becoming increasingly popular, and many traders are turning to mirror trading for assistance. Mirror trading is a technique that allows traders the ability to mirror more experienced traders and to utilize their strategies.
Mirror trading, not surprisingly, is popular because it is a simple approach to forex trading. In a market that is known for its volatility, utilizing forex strategies is important. Following a seasoned trader by way of mirror trading can be much more successful than self trading.
Furthermore, traders are given the option of what various strategies they can follow, and can then monitor performance and verify results of those chosen strategies. Getting started is simple. A trader must first research the best mirror trading strategy (or strategies) that work for him or her. This will depend on such things as the amount of money you wish to trade with, the risk you are willing to take and the direction you want your portfolio to go.
Once a forex trader has selected the strategy (or strategies) for their portfolio, the process begins and the mirror trading takes place. One advantage of this type of trading is that unlike with self trading, emotion is taken out of the equation. Often, traders will close trades because they are frustrated or open trades because they are scared of being left behind while the currency climbs.
A trader panics and gets out too early or stays in too long. Emotion can be an almost impossible obstacle to get around. However, if a trader uses the technology, automatic signals are executed on the user's account, which follow the techniques of the chosen strategies. Another advantage of using mirror trading technology is that it works 24 hours a day, so you don't have to.
If the USD spikes at 5pm due to a government policy announcement, or if the Euro slips at 2am because of an economic statement, your trade will react as a result of the target points that you or your mirrored strategy set. Your entire trade is run by a platform that works 24 hours a day. You do not need to be awake to close a trade, like you do with self trading. Rather, you can let mirror trading do the work for you. Mirror trading can be a definite plus in your forex trading arsenal.
A Comparison Between Mirror and Manual Trading
For some forex traders, deciding on one trading method can be a difficult decision. On one hand, mirror trading is a preferred method for those who would prefer to follow the tested methods of experienced traders. On the other hand, for those who have good instincts about the market and who take their time to research about currencies, manual trading can be fulfilling. It’s important to know the advantages of both methods for successful trading.
For those that are just entering the world of forex trading, the quickest and easiest way to get started is by following manual trading. Manual trading allows a trader to open and close their positions at any time of the day. Opening a trade is relatively straightforward. Simply make a deposit, choose a currency and decide which direction it will head. Set your leverage and your stop loss/take profit, if desired, and open your trade.
A player can do these steps any time of day. If you are advised of an economic announcement, thereby causing the USD to spike, you can immediately get on board and open a trade right away. Manual trading can be especially satisfying for those that are able to commit a considerable amount of time to watching the market.
Mirror trading by comparison, allows traders to select past strategies that are verified and objective, and then follow these strategies during their forex trading. Mirror trading is especially popular for traders who are still building their confidence in the market, though even seasoned traders can benefit from this type of strategy.
One of the most notable advantages of mirror trading is that traders do not need to be tied to watching the market all hours of the day. If a shift in a currency trend occurs and you are not able to buy or sell at that time, mirror trading will make the trade for you.
A second important advantage of mirror trading is that players have less of a chance of closing their trade due to emotion. A common problem encountered by traders is the fear of taking risks and losing money. Because mirror trading follows a set strategy, this problem diminishes.