With Mirror Trading, you can identify when a trade is opened, closed or changed through advanced automatic tools. It takes away the pain of constantly monitoring the market and provides you with ideal trading levels based on trading algorithms.
In our article, we will understand what exactly Mirror Trading is and how you can use it for forex trading.
What is Mirror Trading?
Mirror Trading allows traders to set trading strategies based on automated algorithms, which are in turn, derived from numerous trading patterns, investor behaviour and the historical performance of the currency pairs. It also lets you derive a successful trading strategy from an experienced trader and automatically apply it to your account.
Benefits of Mirror Trading
Since Mirror Trading provides you with trading signals purely based on automated algorithms, data analysis and moves of successful traders, it helps in putting emotions aside. Emotions like greed, fear of missing out, or euphoria do not manipulate your decisions, making trades more practical and successful.
When you mirror trade through any forex broking platform, the brokers use several strategies, analyses and tests before providing you with an automated signal. Since test results are examined and validated before they are uploaded on the platform, it helps in maximising the possibility of a successful trade.
Increases trade precision and transparency
Verified trading results lead to improved trade precision and efficiency. Mirror Trading also ensures that all trading orders and ideal price levels are transparently showcased on the platform. This provides all traders with a clear representation of the price at which the currency pairs are being traded.
Since all trades in Mirror Trading are automated, it saves you the time of monitoring the forex markets and placing orders manually. The brokers regularly analyse the market on your behalf and provide you with the exact strategies to be used.
Helpful for beginners
Beginners do not have to delay their entry into the trading world due to lack of knowledge anymore, as Mirror Trading takes away the pain of heavy research and learning trading techniques. Instead, beginners can start with Mirror Trading and learn about the market side-by-side to shift from automatic to manual trading later, if needed. This also helps them feel more secure about investing their funds for the first time in a new market.
How does Mirror Trading work?
With mirror trade, you choose the expert trader whose orders you want to replicate. In addition to this, the brokers not only follow what the expert trader does but also closely analyse the market. This helps generate trading strategies and the ideal price level at which you should open or close your trade.
Once your broker is aware of the strategy to be used and exit/entry price levels, the automated software allows you to set up these price levels for your trade. You can also add the strategy to be used and wait for the software to execute/trigger orders on your behalf. All you have to do then is sit back and watch the trades being operated automatically.
All mirror trading systems and strategies work in real-time according to your trading order. Hence, the size of your trading lot does not matter, and only a minimal percentage of the trade order is charged as the commission for the same.
How to trade with Mirror Trading?
1. Pick the right broker
Since all Mirror Trading orders depend on the broker’s analysis of the market, the most important step is to choose the right broker for this process. Register with a licensed broker who has strong experience in the market and has already given successful trading orders in the past.
2. Install the Mirror Trading platform
Some brokers offer Mirror Trading on the same platform as regular trading, while some offer a third-party platform for the same. If the latter is the case, download the Mirror Trading platform on your computer system or access the same through a browser.
3. Select a trading strategy or expert trader
You can choose a trading strategy on your own or monitor an expert trader’s performance in the market and let your broker know about the same. Then, you can leave it to the broker to identify strategies that will suit you the best as per the historical decisions made by the expert trader.
4. Devise a risk management plan
Since Mirror Trading is purely algorithmic, you need to ensure that you have a risk management plan ready if things do not go as planned. Define your risk-reward ratio to your broker and let them know your maximum risk appetite.
5. Analyse the trading orders
Once the broker provides you with the ideal entry/exit levels and strategies to be used after monitoring the market, it is your turn to analyse the same. You can skip this step if you have 100% faith in your broker, but it is always recommended to double-check. This will ensure that you not only understand how the broker is operating but also pinpoint if something does not look right.
6. Sit back and watch the markets
The last step after order execution is to sit back and watch the market order react to your automatic decision. You do not have to constantly monitor the market as all orders are automatically executed based on the trading strategy defined.
Copy trading Vs Mirror Trading
Copy trading refers to the type of trading where all trading moves of an expert trader are directly copied to your trading strategy. But Mirror Trading is largely based on market data and algorithms, of which copying successful strategies used by successful traders is only a small part.
Mirror your trades now
Mirror trading is a useful strategy for beginner traders as it allows them to understand how successful orders are placed without handling the orders themselves. It also keeps emotions at bay and ensures that all orders are purely based on technical analysis.
Sign up for a live trading account or try a risk-free demo account on Blueberry Markets.