Mirror trading: what exactly is it
Online trading has become common in recent years..but not everyone who wants to practice it has sufficient time or training. With new forms of automated trading, such as copy trading, social trading, and mirror trading. In this article, we are going to explain what the latter entails.
What is mirror trading?
Mirror trading is a kind of automated trading that emerged in 2000.even before the other forms, such as copy and social trading. Its name gives us a clear clue of what mirror trading means .. since it consists of replicating or reflecting the strategy of a specific trader.
The trader who wants to copy strategies of other market participants is able to see all the features and the outcomes of each one of them in the trading platform of his broker. Then they choose one of them based on their profit goals, trading type, capital, risk tolerance level, etc.
Each one of the operations is copied automatically and configured in the account of the trader that replicates the strategy.
Advantages vs disadvantages of mirror trading
Advantages:
By being automated, we totally put emotions aside. So whatever happens, our feelings of fear or euphoria are not going to lead us to make wrong decisions on the fly.
Transparency: The broker that gives the strategies offers each of the details of the same and, therefore, the whole process.
Disadvantages:
Trading always carries risks. Markets are changing, and the same strategy may underperform in other market conditions.
Beware of trading scams. Many scammers take advantage of the inexperience of others and promise big profits.
Some think that since everything is done for them, they don’t have to make an effort in anything else, just selecting a strategy and letting it reflect on their account.
Mirror trading vs copy trading vs social trading
The basis of mirror trading & copy trading & social trading is the same: a trader copies the strategies and techniques of another trader. However, these three forms have their differences when it comes to putting them into practice.
Mirror trading:
The ‘original’ trader programs and directly hosts his strategy on the server of the company that gives this service for the rest of traders to copy. The trader who eases the strategy .. must have programming knowledge so that he can send the signals that will later be copied in the client’s trading account.
Copy-trading:
Unlike mirror trading, it does not program its strategy on the company’s server but instead hosts it on its own server and sends it to the trading platform for the broker to send it to its clients. A client then becomes a copy trader.
Social trading:
Social trading is a kind of user community that works in the same way as a social network, but around a topic as certain as trading. In this case, we can talk about 2 kinds of actors that engage in this network:
– Signal providers.
– Professionals who share their operations & followers & who seek advice & exchange opinions & investigate winning strategies. Read more
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