Best Copy Trading Platforms

What is Copy Trading?

Copy trading is an investment method that allows traders, whether beginners or experienced, to automatically replicate the strategies of other, more seasoned investors. This approach is particularly popular in CFD (contracts for difference), cryptocurrency, Forex, and stock trading.

How Copy Trading Works

The principle of copy trading is simple: an investor (called a "copier") selects an experienced trader (called a "strategy provider") and configures their account to automatically replicate their positions. When a copied trader opens or closes a position, this action is replicated in real-time in the copier's account, in proportion to the capital invested.

Why Choose Copy Trading?

Copy trading offers several advantages, including:

• Accessibility: It allows beginners to invest in the financial markets without needing advanced trading knowledge.
• Time-saving: Investors don’t need to analyse the markets themselves or make complex decisions.
• Diversification: It’s possible to copy several traders and thus spread the risks.
• Progressive learning: By following the strategies of experienced traders, investors can understand the market mechanisms and refine their own trading strategy.

What is a copy trading platform?

A copy trading platform is an online service that allows investors to automatically copy the strategies of more experienced traders. These platforms act as an intermediary between professional traders (or strategy providers) and investors wishing to replicate their trades.

They offer risk management tools, performance tracking features, and customization options to adapt the copy trading strategy to one's own financial goals.

Copy trading platforms work by connecting users' accounts to those of the traders they wish to follow. Here are the main steps:

• Registration on the platform: the user creates an account and deposits funds.
• Selection of a trader to copy: users can filter traders based on their performance, risk level, trading style, and other criteria.
• Configuration of parameters: the user chooses the amount they wish to invest and adjusts parameters such as risk level or leverage.
• Automation of transactions: once copy trading is activated, the selected trader's positions are automatically replicated in the investor's account.

Copy Trading and Social Trading: What are the Differences?

Copy trading and social trading are often confused, but they have notable differences. Both allow investors to draw inspiration from the strategies of other traders, but their approach and operation vary.

• Copy trading is an automated process where an investor directly copies the trades of an experienced trader. Once the strategy is chosen, the orders are replicated without manual intervention.
• Social trading, on the other hand, relies more on the exchange of information and individual decision-making. Traders share their analyses, strategies, and performance, but each investor manually chooses the transactions they want to execute.

What social trading solutions are offered by brokers in India?

In India, several brokers offer social trading and copy trading solutions to enable investors to follow and copy the strategies of experienced traders. These solutions are often integrated directly into trading platforms or accessible via specialized software. Here's an overview of the most popular software and the brokers that offer them.

How to choose a copy trading platform?

Choosing a copy trading platform is an essential step to maximise your chances of success while minimising risks. Several criteria must be taken into account to select the platform best suited to your needs and investor profile.

1. Regulation and security

When selecting a copy trading platform in India, it's crucial to ensure that the platform complies with the regulations set forth by the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI). SEBI oversees securities markets, including equities and derivatives, while the RBI regulates foreign exchange transactions under the Foreign Exchange Management Act (FEMA).

Currently, SEBI has not explicitly approved copy trading platforms for retail investors. In fact, SEBI has banned automated trading for retail clients, which includes the automatic replication of trades—a core feature of copy trading platforms . Therefore, Indian residents should exercise caution and avoid engaging with unregulated or offshore copy trading services that may not comply with Indian laws.

2. Traders Available for Copying

The diversity and quality of the traders offered are key elements. It is advisable to choose a platform that offers filtering tools to analyze the performance of traders:

• Historical performance
• Risk level
• Trading strategy (short term, long term, scalping, etc.)
• Maximum Drawdown

Certain platforms also offer performance scores to help traders choose who to copy.

3. Accessible Assets and Markets

Indian traders have access to a diverse range of financial instruments through SEBI-regulated platforms. When choosing a copy trading platform, consider the variety of assets available to ensure alignment with your investment goals.

• Forex: In India, forex trading is permitted only in specific currency pairs involving the Indian Rupee, such as USD/INR, EUR/INR, GBP/INR, and JPY/INR. Recently, SEBI has allowed trading in select cross-currency pairs, including EUR/USD, GBP/USD, and USD/JPY, through recognized exchanges .
• Stocks: Indian investors can trade shares of companies listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). Popular stocks include Reliance Industries, Tata Consultancy Services (TCS), Infosys, and HDFC Bank.
• Indices: Major indices like the Nifty 50 and BSE Sensex represent the performance of top Indian companies across various sectors. These indices are widely followed and offer insights into the overall market trends .
• Commodities: Through exchanges like the Multi Commodity Exchange (MCX) and the National Commodity and Derivatives Exchange (NCDEX), traders can invest in commodities such as gold, crude oil, natural gas, copper, silver, and agricultural products like cotton.
• Cryptocurrencies: While trading cryptocurrencies is not illegal in India, it operates in a regulatory grey area. The RBI has expressed concerns over crypto trading, and there is no formal regulatory framework in place. Investors should exercise caution and stay informed about the latest regulatory developments.

A platform offering a wide array of these assets can help Indian traders diversify their portfolios, manage risk effectively, and capitalize on various market opportunities.

4. Fees and Commissions

Copy trading platforms apply different fee structures, which can impact your profitability. Here are the main costs to analyze:

• Spread: the difference between the buying and selling price of an asset.
• Commission per trade: some brokers charge a percentage on each transaction.
• Inactivity fees: fees may apply if you do not make transactions for a certain period.
• Profit sharing: some platforms charge a percentage of the profits made through copy trading.

5. Features and User Experience

A good copy trading platform should offer an intuitive interface and powerful tools to manage investments effectively. Key features to look for include:

• Demo mode: test the platform with a dummy account before investing real money
• Risk management tools: stop-loss, take-profit, adjustment of invested capital
• Advanced charts and graphs: real-time analysis of the performance of copied traders
• Mobile application: access to investments on the go

6. Reviews and Reputation of the Platform

Consulting user reviews and ratings on specialized sites like Trustpilot or trading forums provides an overview of the advantages and disadvantages of each platform. Prioritize those with a good reputation in terms of:

• Reliability of transactions
• Responsive customer service
• Ease of withdrawing funds

7. Customer Service and Support

Good customer support can make all the difference in the event of a technical problem or a question about how copy trading works. Check:

• The contact channels (online chat, email, phone)
• Availability (24/7, opening hours)
• The language of support (English)

What assets can you trade with copy trading?

Copy trading allows you to invest in a wide range of financial assets, depending on the markets offered by the chosen platform. Some assets are more suited to copy trading strategies due to their liquidity and volatility. Here is an overview of the main assets accessible via copy trading.

How to Practice Copy Trading with an Online Broker?

Copy trading with an online broker is a simple process that allows investors to copy the strategies of experienced traders. Here are the main steps to start and optimize your copy trading experience.

1. Choose a Broker Offering Copy Trading

Not all trading platforms allow copy trading. It is therefore essential to choose a broker that offers this functionality and is regulated by a recognized financial authority (SEBI, etc.). Some of the most popular platforms include eToro, ZuluTrade, MetaTrader 4/5 (with signals), DupliTrade and Myfxbook AutoTrade.

Criteria to verify before choosing a broker:

• Regulation and security of funds
• Available assets (Forex, stocks, cryptos, indices...)
• Fees and commissions applied
• Quality and number of traders to copy
• Risk management tools and platform ergonomics

2. Create an account and verify it

Once the broker has been selected, you need to open a trading account by providing personal information and carrying out KYC (Know Your Customer) verification, which consists of submitting:

• A valid form of identification
• Proof of address
• A payment method to deposit funds

Certain brokers allow access to a compte démo, which is useful for testing the platform and its interface before investing real money.

3. Deposit funds into your trading account

After account validation, the investor must fund their trading account. Brokers generally offer several deposit methods:

• Bank card (Visa, Mastercard, etc.)
• Bank transfer
• E-wallets (PayPal, Skrill, Neteller, etc.)
• Cryptocurrencies (on some platforms)

The minimum deposit amount varies depending on the platform (from ₹4,000 to several tens of thousands of rupees depending on the broker and the chosen asset).

4. Select a trader to copy

Choosing the trader to copy is a key step in succeeding in copy trading. Platforms provide various criteria for analyzing traders:

• Past performance (returns over several months/years)
• Risk level (the more risk a trader takes, the greater the variations in their capital)
• Strategy used (short term, swing trading, scalping...)
• Maximum drawdown (maximum loss recorded)
• Number of copiers and reputation

Certain platforms like eToro assign risk scores to traders, allowing for the assessment of the stability and reliability of their strategy.

5. Define the amount invested and adjust the parameters

Before copying a trader, the investor must decide on the amount they wish to allocate to this strategy. Several risk management options are available:

• Fixed amount to invest: Choose a specific amount that will be used to copy the trader.
• Automatic stop-loss: Define a maximum loss that should not be exceeded.
• Copy level adjustment: Some platforms allow you to copy trades in proportion to the capital of the followed trader.

6. Monitoring and Adjusting Your Copy Trading Strategy

Copy trading is a passive method, but it is recommended to regularly monitor the performance of the copied traders and adapt your strategy if necessary.

Best practices for optimizing your copy trading:

• Diversify by copying multiple traders to limit risks
• Regularly check performance and adjust investments if needed
• Do not panic in the face of market fluctuations and remain consistent with your strategy
• Train in parallel to better understand how the market works

What are the fees of brokers offering copy trading?

Copy trading platforms apply different types of fees that can affect the profitability of investors. It is essential to fully understand these costs before choosing a broker, as they vary depending on the platforms and assets traded. Here is an overview of the main fees encountered in copy trading.

1. Spreads: an indirect cost on each transaction

The spread is the difference between the buying (bid) and selling (ask) price of an asset. It is an indirect cost that the broker automatically incorporates into each transaction, which means that the investor must cover this cost before being profitable on a trade. The higher the spread, the higher the cost of trading.

Example of spread on copy trading

An investor copies a trader who opens a position on the EUR/USD with a spread of 1.5 pips. This means that at the moment the position is opened, they are immediately at a slight loss equivalent to these 1.5 pips. If the market does not move sufficiently in their favor, the transaction may not be very profitable.

2. Transaction Fees: A Percentage or a Fixed Amount

Some brokers apply a commission on each transaction made, in addition to the spread. This commission can be a fixed amount per order executed or a percentage of the amount invested. Brokers who use this model are often those who offer tighter spreads.

Example of copy trading commission

An investor copies a trader specialized in stocks. For each purchase or sale of a stock, a commission of 0.1% is charged.

• If he invests ₹80,000 in a stock, he will pay ₹80 as a fee when opening the position.
• If he closes this position later for ₹96,000, he will pay a commission of ₹96 again.

Thus, his total fees on this transaction will be ₹176.

3. Management or Performance Fees: A portion of the profits returned to the broker

Some copy trading platforms levy a commission on the profits earned from copied positions. This model is generally used by brokers who offer professional traders to copy and who apply a profit-sharing policy.

Example of management or performance fees

A broker applies a performance fee of 20% on the gains generated via copy trading.

• If an investor makes a profit of ₹41,687.12 by copying a trader, they will have to pay ₹8,337.42 to the broker (20% of ₹41,687.12).
• They will therefore have ₹33,349.70 net of fees.

This type of fee is often justified by the quality and expertise of the traders offered by the platform.

4. Inactivity fees: a cost for unused accounts

Brokers sometimes impose inactivity fees if a trading account remains inactive for an extended period (often 3 to 12 months). These fees are charged monthly as long as the user does not perform any transactions.

Example of inactivity fees

A broker applies an inactivity fee of ₹800 per month after 6 months of no trading activity.

• An investor who has not used their account for 8 months will have to pay ₹1,600 in cumulative fees.
• To avoid these fees, they can simply execute a transaction before the deadline.

This type of fee is particularly important to monitor if you plan to use a platform occasionally.

5. Withdrawal fees: a cost to recover your earnings

Some brokers charge fees on withdrawals, especially when the investor uses a bank transfer. These fees may be fixed or proportional to the amount withdrawn.

Withdrawal Fees Example

An investor wishes to withdraw 500 from their trading account. The broker applies fixed fees of 5 on each withdrawal.

• In the end, the investor will receive 495 on their bank account.

These fees can be avoided or reduced by choosing platforms that offer free withdrawals or by using alternative payment methods such as e-wallets (PayPal, Skrill, Neteller).

Is copy trading suitable for beginners?

Copy trading is often presented as an ideal solution for novice investors, as it allows you to automatically copy the strategies of experienced traders. However, although this method facilitates access to the financial markets, it is not entirely without risk. Here is an overview of the advantages and limitations of copy trading for beginners.

The advantages of copy trading for beginners

• No Expertise Required: Unlike traditional trading, which requires in-depth market analysis, copy trading allows beginners to invest without having to master technical concepts such as technical or fundamental analysis.
• A Progressive Learning Curve: Observing the strategies of experienced traders allows novices to understand market mechanisms and learn how to better manage risks over time.
• Time-Saving: Since copy trading is automated, there is no need to constantly monitor the markets. Orders are executed in real-time, without manual intervention.
• Simplified Diversification: Platforms allow you to copy multiple traders at the same time, which offers a better distribution of risk and avoids betting everything on a single strategy.
• Access to Different Asset Classes: By copying multiple specialized traders, it is possible to invest in various assets (Forex, stocks, cryptos, commodities, etc.) without requiring in-depth knowledge of each market.

The limitations and risks for beginners

• Dependence on the performance of copied traders: Copying a trader does not guarantee profits. Even experienced traders incur losses, and it is possible to copy a strategy that proves ineffective in the long term.
• Lack of control over investment decisions: Unlike manual trading, copy trading leaves little room for personalization. The investor automatically follows the decisions of the copied trader, which can be frustrating in the event of a decline in performance.
• Risk of amplified losses: Some traders use high leverage, which can lead to significant losses if the market moves unfavorably. It is crucial to carefully analyze the level of risk before copying a trader.
• Fees that can reduce profitability: Some brokers apply fees on copy trading (commissions, spread, performance fees, etc.), which can impact the profits of beginner investors.
• The absence of guaranteed results: Even when copying a successful trader, the financial markets remain unpredictable. Past gains never guarantee future performance.

What strategy with copy trading?

Copy trading allows you to adopt different strategies depending on your investor profile, your risk appetite and your financial objectives. Some approaches favour stability and security, while others aim for higher profitability by accepting a higher level of risk.

How to become a trader to follow for social trading?

Becoming a trader to follow on a social trading platform requires much more than just financial performance. You need to demonstrate a reliable strategy, good risk management, and transparency that inspires confidence in investors wishing to copy your transactions.

First, it is essential to define a clear and reproducible trading strategy. Investors favour traders whose performance is stable and consistent over the long term. Whether it's scalping, swing trading, or long-term investing, a well-defined approach applied rigorously helps to gain credibility. Good risk management is also crucial: limiting drawdown, avoiding excessive leverage, and not exposing all of one's capital on a single position reassures potential copiers.

Transparency is another key element. The most followed traders on copy trading platforms regularly share their analyses, decisions and results. Publishing updates, explaining one's positions and being active in the community helps to attract copiers and retain those already present.

Finally, a regular presence and interaction with copiers reinforce investor confidence. Some brokers even offer financial incentives to traders with a large number of followers. The more the trader inspires confidence, the more likely they are to be copied and increase their income via copy trading.

What is the taxation on income from copy trading in India?

In India, profits from copy trading are subject to taxation under the Income Tax Act. The specific tax treatment depends on the nature of the trading activity and the assets involved.Koinly

Income Tax on Copy Trading Profits

Profits from copy trading are typically classified as business income. This means they are added to your total income and taxed according to the applicable income tax slab rates, which range from 5% to 30% based on your total income. Additionally, a Health and Education Cess of 4% is levied on the tax amount. 

If you are engaged in copy trading as a business activity, you may be eligible to deduct expenses directly related to your trading activities, such as brokerage fees, internet charges, and subscription fees to trading platforms.

Taxation of Cryptocurrency Gains

Profits from copy trading in cryptocurrencies are subject to a flat tax rate of 30%, as per Section 115BBH of the Income Tax Act. This rate applies regardless of the holding period and does not allow for any deductions except for the cost of acquisition. Additionally, a 1% Tax Deducted at Source (TDS) is applicable on the transfer of crypto assets exceeding ₹50,000 in a financial year. 

It's important to note that losses from cryptocurrency trading cannot be set off against any other income and cannot be carried forward to subsequent years.

Reporting and Compliance

All income from copy trading must be reported in your annual Income Tax Return (ITR). For business income, you should use ITR-3 or ITR-4, depending on your specific circumstances. For cryptocurrency gains, you must report them under the "Schedule Virtual Digital Assets (VDA)" section of the ITR. 

Failure to accurately report income from copy trading can result in penalties and interest charges. Therefore, it's advisable to maintain detailed records of all your trading activities and consult with a tax professional to ensure compliance with the tax laws.

Nishadh Mohammed

Nishadh Mohammed is a seasoned news editor and financial writer, working with HelloSafe since May 2023. Nishadh has developed expertise in financial markets, insurance, and investment products, with a deep understanding of the Canadian financial landscape. He has honed his SEO skills and content marketing strategies while writing for Canadian publishing houses. Armed with a master's in Business Analytics and extensive journalistic experience, Nishadh uniquely combines data proficiency and thorough research to deliver comprehensive and accessible information.