Forex trading indeed requires a significant level of trading experience and knowledge so you can weather the storm in the financial markets. But does it mean that everyone needs to be highly experienced to participate in this ever-growing business? Not necessarily! XM Copy Trading program paves the way for you and your trading pleasure. In this way, you’d bypass all the rigmarole and hassle of learning the ins and outs of forex trading and can join the rest of the happy traders in the FX Market almost immediately.
So, what is XM Copy Trading?
If you are an avid reader of financial journals or an occasional trader in your own right, you have probably heard the term “Social Trading.” Copy Trading is a close relative of social trading which allows traders to copy the trades of professional traders. That way, you as a new trader won’t have to worry about learning numerous charts, various trends, or different tools, and can simply follow the experts and copy their trading strategies to reap the benefits. On the other side of this spectrum, there are those have the trading know-how to allow others to copy their trading strategies for a paid commission.
Now, let’s break down the XM Copy Trading program into more digestible morsels.
How does XM Copy Trading work?
XM forex broker offers two types of trading accounts to XM copy traders, namely the Investor and Strategy Manager.
As an investor, it’s safe to assume that you’re new to the game but lack the patience to go through the learning process which is quite a bumpy road. So, what you need to do to get started is to invest some greenbacks ($$) and choose a strategy manager to follow and copy. Once you’ve chosen and copied your preferred expert’s strategies, they will be applied to your account. Afterward, you can grab a cup of coffee, lean back, and wait for the trades to bear fruit, in which case you’ll collect your profits and in return pay an agreed-upon commission to the expert.
XM also allows you to choose different traders (Strategy Managers) to follow at the same time. By choosing different traders, your portfolio will be diversified, in other words, you increase your profits and decrease your losses. So, you’d kill two birds with one stone!
As a Strategy Manager, you can showcase your trading skills and let other traders (investors) follow and copy your trading strategies for a substantial commission. It’s a win-win for you, you carry out your trades as always, and receive a commission for your successfully executed trades.
Now the question is should you trust XM Copy Trading as a viable option?
XM broker is very forthcoming and transparent about the makings of the program in terms of how it works and what you need to do as an investor or strategy manager to benefit from it. Plus, you get to see pro traders in action and if you pay enough attention you can pick up a thing or two about trading yourself!
With that in mind, there are NO trading options without any risks. Copy Trading may be a great option but it is far from being risk-free. Therefore, it is always recommended to use tools such as Stop Loss to ensure a much safer trading experience overall.
How to navigate the XM Copy Trading Platform:
First thing first, all the XM clients need to become a member and verify their personal information as specified to be able to apply for the copy trading program. When your mind is made up in regards to which route you want to take, Investor or Strategy Provider, you need to go ahead and sign up. The next step depending on your initial choice upon signing up will be either following an expert’s strategies or sharing your very own.
To do that, log in with your credentials as a member and go to Copy trading page. On the left-hand side, you will see a menu containing Copy Trading, Portfolio, Competitions, Social Feed, Settings, and FAQs, as illustrated below:
In the copy trading menu, you can see a list of Strategy Managers and their details (performance charts, returns, numbers of investors following them, percentage fees, etc.). This menu allows you to narrow down your options based on details, such as best performers, most popular Strategy Managers, trading frequency, risk score, and strategy type.
To become an Investor in the XM Copy Trading Program:
First, you need to open an Investor Account with full verification of course – this process is either done automatically or you can manually click the “Create Investor” button in the Member’s Area.
Next, you go for the strategy manager of your choice and follow him. Here you can shop around based on different criteria, such as leverage, fees, minimum investment, number of investors, total investment, performance chart in different time frames, portfolio, and asset allocation, whichever holds more significance for you.
When you’ve chosen the trader/s in question, the next item on your to-do list will be copying their trades. To figure out the investment amount, you can use the Multiplier Formula provided by XM Forex broker as follows:
Let’s say you want your Strategy Manager to open a position of 1 lot with a 0.7 multiplier, in which case your account (Investor Account) will open a 0.7 x 1 lot = 0.7 lots.
Other crucial details that you as an Investor need to be mindful of are: your account can only be accessed via XM Web Platform or Mobile, you can only have 1 account as an investor with unlimited copied strategies, your account unit is in USD with leverage of 1:300, you can use your account for micro lots with spreads and swaps similar to the standard account, you can deposit into your account by all available options (Member’s Area, direct deposit, or internal transfer), the copied positions will apply based on prevailing market prices once the markets are open, you can choose to pause and resume strategies, the minimum trade size for indices and other instruments are 0.1 lots and 0.001 lots respectively, the minimum investment amount is $50, your account has a margin call of 50% and stop out of 20%, and last but not least, Stock CFDs are NOT currently available.
To become a Strategy Provider in the XM Copy Trading Program:
Go to your Strategy Manager Area and click the “Create Strategy” button. Provide all the details of your trading account as well as your strategies in question, such as commission amount and password. Additionally, if you’d like you can import your existing XM accounts’ history.
Other crucial details that you as a Strategy Manager need to be mindful of are: you can run your trading account on both MT4 and MT5 trading platforms, your strategies will only be visible to investors with 150$+ equity, you can open up to 10 trading accounts for this program, you’ll have access to details, such as statistics of return and profitability, risk figures, trading frequency, asset allocation, and fees, you can have as many followers as possible, and you can demand up to 50% of your investors’ profits as commission transferred to your account based on the account currency.
How are the fees calculated?
As an investor, you are only required to pay for profitable trades, those that are above the High-Water Mark (HWM); in other words, more than the previous highest value earned using your investment.
The above chart is an example showing the progression of your trades after following a Strategy Manager. In this chart, trade 1 is opened right after following the strategy manager. Since it is a profitable trade, your manager is entitled to his commission according to the specified percentage. So based on the example chart, the results of trades 1, 2, 3, 4, and 5 are above HWM, above HWM, non-profitable, below HWM, and above HWM, respectively. In this case, you need to pay a commission for trades 1, 2, and 5. Furthermore, the commission is paid daily and can be demanded up to 50%.
The Advantages of XM Copy Trading
✅ For the Investors
👍No prerequisites: Investors, especially new traders, can benefit from the XM Copy Trading Program to start their trading journey right away. Without any special skills or anything, they can simply follow and copy their preferred trading expert for potentially good results. Simply find your expert(s), make your investment, and sit back to see the pros in action.
👍Easy as pie: assuming you’re new to the forex world, you may not have the resources or the gusto to learn the trade from scratch; therefore, this is a sure and easy way for you to get started. Furthermore, you won’t even need to analyze an endless array of charts, study market movements, read news, or watch out for crucial events. That said, it doesn’t mean you can just forget about your assets, you still need to pay close attention as the trades move forward so you can avoid unnecessary losses.
👍Learn from the Best: as you observe your assets being put into action using the tried-and-true trading strategies of the experts, you can learn a thing or two about trading yourself. Depending on how keen you are, you can start developing your very own strategies later down the road by simply watching every move they make. Think of the commission you pay as the money you need to spend to learn the business anyway.
✅ For the Strategy Managers
👌Earn Bigger: Why do Forex traders join the market anyway? To earn money and earn big, that’s why. The XM Copy Trading enables you to do just that. While you’re using your skills and strategies to earn, why not have some followers whose money can catapult your trading game?! you can earn up to 50% of your followers’ profits by carrying out profitable trades.
👌Give New Strategies a Shot: even expert traders could use extra funds to up their game. The XM Copy Trading will allow you to have many followers and with their capital boost, you can potentially experiment with new strategies you’ve always wanted to try. It should, however, be noted that by doing so it’s not only your capital you’re risking, it’s your followers’ as well. Let the old saying “measure twice, cut once” be a reminder so you won’t cause any irreparable damage to your reputation.
A word of advice: trading forex is exciting and full of possibilities and XM Copy Trading could help you do better if used properly; however, nothing in life is guaranteed and high risks are always a factor in the world of finance. Even the best forex traders can make mistakes, your strategy managers are only human and their past performance does not guarantee their future success. So, do your due diligence, and always be mindful of where your money goes because, at the end of the day, the only responsible party for your money is you. Copy trading can help you participate, but it should never be considered your go-to method for the rest of your trading career.