What Is Copy Trading in Malaysia?
As Malaysians, we are always caught up with work and the traffic in peak hours, which is why we have little to no time to personally invest or trade, this is why copy trading is popular in Malaysia. In this article, you will be given tips and tricks to start right away!
Copy trading is considered as part of the widely popular social trading, which allows an individual to copy, or follow the trades that are run by the individual that is selected. It is now available with many brokers, and many different trading platforms, so you will need to know how to start, and which providers are the most trusted.
Table of contents
How Does Copy Trading Work in the Malaysian Forex Market?
Copy-trading works in a few ways:
When the trades are being copied, the past trades that were executed by the copied trader will also be executed at your account but the current exchange rate. For example, the copied trader executed his trade a few weeks back with the pair USD/MYR at 1 USD = 4.2 MYR, but you start copying his trade today at 1 USD = 4.4 MYR, hence the trade will be executed at 1USD = 4.4 MYR instead.
Once trades are copied, you will have the same stop loss (SL) and take profit (TP) as the copied trader. The actions of your account will be mirroring the copied trader.
The invested amount is generally based on the percentage of the trade that the copied trader is executing. For example, the copied trader has a portfolio size of USD 2000, and he executes a trade worth USD 200, which is 10% of his portfolio size. You as a copy trader have USD 500 of capital, hence the trade will be USD 50, which is also 10% of your portfolio size. This is so that both of you are essentially making the same trade. The calculation mechanics are done automatically by the brokerage, so there’s no need to be overwhelmed by the number of calculations needed to be done for trades.
It is important to understand the guidelines of each brokerage as they will have their system of copy trading, popular social trading platforms such as AvaTrade and Tickmill, have their own guidelines as well.
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Pros and Cons of Copy Trading Network in Malaysia
Pros:
1. Bridging the knowledge gap
Trading is essentially a skill that takes hours to years of knowledge to be able to effectively understand the market. With copy trading, you technically require little knowledge because you’re trading with the skillsets of the traders you’ve copied. This way, a newbie can take advantage of an experienced trader’s expertise. You will want to spend a little time checking the history of any account you follow, and only stick to regulated platforms.
2. A diversification strategy (People-based portfolio)
A common strategy is that you can treat the well-performing traders as your fund managers and diversify your funds to a few different traders. This is so that you do not need to put all eggs into one basket. Besides, you can copy as many traders as you want!
Every trader has different ideas, and a diversified portfolio is usually a healthier one. There are also different instruments traded by different people. If you want to get forex trading exposure, you copy trade with a currency specialist. If you want to get stock market positions added to your portfolio then you can follow specialists in shares and index trading. And so the list goes.
Cons:
1. Knowledge gap
This is both a pro and a con. The reason being is because when you copy the trades, you do not make decisions for yourselves. This will cause you to rely on the traders instead of building up your trading knowledge and experience. If you do not know enough to decide on which accounts to follow, then you need to spend some more time in checking and building knowledge, but this can take away from one of the benefits spending less time copytrading than doing yourself.
2. The right person
Choosing a well-performing trader is risky. This is because that trader might be highly profitable last week but the week you copy that trader, he/she lost most of the trades, and you as the copier will suffer similar consequences. Trading is not easy for anyone, even professionals, with losses happening more frequently than gains. You can watch many traders first before deciding to copy any of them. It takes a little longer, but is a safer option in the long run.
Best Brokers for Copy Trading Forex in Malaysia
Below will be a quick summary of the highly-rated brokerage platforms for copy trading:
Tickmill
PROS
- Excellent trading experience. Ultra-fast trade execution thanks to high-end tech infrastructure. ECN trade execution ensures that clients get the best possible prices, with average trade times of 0.20 seconds and no requotes.
- Well-regulated, with the firm regulated by the LFSA. FCA (Financial Conduct Authority) and DFSA (Dubai Financial Services Authority) also supervise.
- Client funds are held in segregated accounts, and Negative Balance Protection ensures that losses are capped at the size of your initial investment.
- Three types of account to choose from: Pro, Classic and VIP. Each set up to cater to a different kind of trading style and offering leverage of up to 1:30.
- Super-low trading fees and commissions. Spreads start at 0.00 pips and administration-style costs stripped back to the bare minimum.
CONS
- A range of asset groups, and the total number of markets available to trade is relatively limited.
- Minimum account opening balance requirement of $100.
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BlackBull
PROS
- Trade more than 26,000 instruments, with the broker offering markets in stocks, forex, commodities, indices and cryptocurrencies.
- Leverage of up to 1:500 allows clients to scale up on risk-return.
- The customer support team is available 24/7 and contactable by phone, email and live chat, with the website available in 11 languages.
- Great tech infrastructure results in fast and reliable trade execution. Clients can also take advantage of VPS server hosting to ensure that trading is carried out close to the heart of the market.
- Spreads start at 0.00 pips, and no fees applied to cash deposits and withdrawals, and no account inactivity fees.
- Minimum account opening balance of $0 and fast-track account opening process, which allows traders to get set up within five minutes.
CONS
- Regulatory framework is satisfactory, but not as strong as it could be.
- An out-and-out CFD broker that delivers a great trading experience, but not the best fit for those with a longer-term, investment-style approach.
- Mobile trading app is satisfactory rather than ground-breaking.
You can read the full BlackBull review for more information.
Octa
Pros:
- Hassle-free account opening
- Emphasis on ease of use
- Innovative analysis tools
- Leverage of up to 1:1000
Cons:
- Lack of advanced research and analysis materials
- No telephone customer support
Get more information in the Octa broker review.
Zulutrade
Pros:
- Zulutrade is known for its large network of brokerages which can allow you to copy traders from different platforms under their network. This way, you will have a large variety of traders to pick from based on their performances.
- The platform is available in many languages including Bahasa Melayu.
- It is regulated in the EU by Greece’s Hellenic Capital Market Commission (HCMC) and has obtained a Triple-A Experts SA.
Cons:
- Zulutrade is not a trading platform but a cross-trading platform so it does not provide trading services.
- Although available with a large network of brokerages, the platform will only work best with some brokers such as AAAFx.
FXTM
Pros:
- FXTM works with popular electronic trading platforms such as MetaTrader 4 and Meta Trader 5.
- The platform provides an extensive amount of trading knowledge from Ebooks to articles that could help the traders improve their knowledge in trading.
- It is regulated by financial authorities such as the Financial Conduct Authority (FCA), the Cyprus Securities & Exchange Commission (CySEC). It has also obtained an investment dealer’s license from the Financial Service Commission of Mauritius (FSC).
Cons:
- The platform has a limited product to choose from to start as its main focus is in Forex trading.
- Withdrawal periods are considered poor according to feedbacks from traders.
Conclusion & Thoughts
To copy trade may sound easy but it does come with high risk. Although time might be a factor, it is recommended to do proper research and equip yourselves with enough knowledge before you start applying copy trading in Malaysia. Remember to always make informed decisions and of course, happy trading!
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