First of all, what is a trade copier? As the name suggests, this software application is a trader’s tool that is used to copy trades from one account to another. Copying can also be done from more than one account and to multiple accounts as well. The accounts can even be held at different brokers and, under certain circumstances, on different trading platforms. The PowerTradeCopier copier, to take an example, is used to copy trades from the MT4 platform to broker accounts that support a FIX API connection, e.g. Currenex, HotSpot, Interactive Brokers (IB), LMAX, ADS Securities, Fortex (Marex), MIG Bank, CitiFX, SwissCode, Saxobank, Commerzbank, etc. This copying is also possible on the Jforex platform.
The trade copier CopyToolPro can be used to copy trades from MT4 to both the MT4 and MT5 trading platforms. It can equally be used to copy trades from the MT5 platform to the MT5 and MT4 trading platforms.
Almost every trade copier is designed to perform the following tasks:
- Modify stop-loss and take-profit orders
- Modify lot sizes and adjust the risk that is based on the relative equity of two accounts
- Copy orders for specific symbols and/or specific magic numbers
- Send e-mails alerts about a user’s trading activity
- Use a single magic number for all orders that belong to a trader. This enables traders to analyze results by each expert advisor
- Facilitate automatic adjustment between different broker currency symbols, e.g. EUR/USD or EUR/USDcx, and facilitate automatic adjustment between brokers that engage in 2/3 digit pips and 4/5 digit pips pricing
- Facilitate automatic adjustment to market execution when dealing with brokers that do not allow stop-loss and take-profit orders to be placed together with market orders
- Deal with partial closes
As products, trade copiers were first intended for money managers and forex signal providers. However, due to a number of advantages inherent in trade copiers, the products have quickly caught on with individual traders as well. Let’s review these advantages.
- Trade copiers offer a plethora of additional functions that can improve trading strategies. The option of overwriting stop-loss and take-profit parameters is one such function. It is very helpful in a situation where a trader copies a trading strategy to his account, but the strategy was developed by someone with a different risk profile. To adjust the strategy to the trader’s risk characteristics, the trader can modify the stop-loss and take-profit levels. A trader can also rewrite or remove existing comments that come with a trading strategy.
Traders also have the option of copying stop-loss orders and take-profit orders as they appear in their master accounts, or by allowing for any price difference between the order prices in the master account and those in a slave account, in terms of pips. Price differences may happen because there are often price differentials of several pips between different brokers, and because there can also be a brief delay during copying of orders. This can result in different prices on orders copied to slave accounts. To that end, a trade copier enables a trader to copy s/l and t/p orders as they appear in the master account or, alternatively, at prices that reflect the pips differential between the accounts involved.
To put that into concrete numbers for the sake of clarity, imagine that the master account shows a EUR/USD buy order at 1.3245 with a stop-loss level of 1.3230. The price in the slave account is 1.3246. Imagine that you copy the order as it appears in the master account. The stop-loss level will be 1.3230. If you copy the order and base it on the differential, the stop-loss level will be 1.3231.
A trade copier also gives you the option of copying from drawdowns: instead of copying orders right away, the copier will wait for the price to edge a few pips towards the drawdown, which makes it possible for you to make a profit of two or three additional pips on each order.
Trade copiers also come with filtering functions. These functions will disallow trading in currencies that you may wish to avoid for reasons of high risk or low profitability, as well as trading in, say, metals (a valuable tool for a trader whose religious convictions make trading in gold unacceptable). You can also apply filters to certain times that you consider inauspicious for trading. For example, your review of historical data might lead you to conclude that trading at certain hours or on certain days leads to a drawdown risk. You can apply the filter functionality to avoid trading at these times.
- Trade copiers have enabled traders to copy trades from trading strategies that have proved their attractiveness or use during industry championships or in the service of experienced money managers. Copying trades from accounts that belong to experienced money managers is not at all impossible. All you need is the account number and password of the investor you are interested in. That information, by the way, is frequently obtainable.
- Trade copiers allow a trader to copy strategies appropriate to the trader’s risk profile and appetite. This is done through the use of the lot scaling coefficient and the manipulation of other management settings.
- Trade copiers make it possible for a trader to buy a pricey robot and share the cost with another friend-cum-trader. The robot can be installed in one account; its trades will be copied to another account. A trade copier will also help you trade with several accounts in case the robot is restricted to an account number.
- As the lore has it, you can use a reverse module to reverse all orders in an unsuccessful trading strategy and render the strategy a profitable one. We do not have any conclusive proof that this kind of reversing is workable, and it would seem that finding such a strategy is a very difficult endeavor.
- Trade copiers let traders conceal their s/l orders, t/p orders, and the level of their pending orders from brokers. This information is stored in the memory of a user’s trade copier. Should the price reach the specified level of a hidden order, the copier will automatically turn the order into a market order.
- Trade copiers offer multi-platform functions. The advantages of this are numerous, and I will touch on one of them: the use of a FIX API connection through the FIX API Add-on, which is accessible through PowerTradeCopier. It enables a trader to use a strategy currently in use in the MT4 master account and open orders with “purer” quotes at a FIX API broker. The use of FIX API brokers here reduces the risk of brokers trading against the trader, even if this risk cannot be brought down to zero.
I have already mentioned that trade copiers were first designed for money managers and forex signal providers. Money managers like trade copiers because clients often come to them with accounts that have already been opened, often at a number of different brokers. Managing such a multitude of accounts without the use of a trade copier is practically impossible. Also, for your information, the master account need not be on the same machine as the trade copier.
As for forex signal providers, it is worth noting that not all trade copiers can help forex signal providers: a forex signal provider does not usually know the trading password of a client. This situation can be remedied by the use of a net trade copier, e.g. the PowerTradeCopier Provider mode. This will let a client enter the client’s password and proceed to adjust the settings (e.g. the lot size) as required, without having to give out the password to the forex signal provider. What’s more, orders will automatically open on the client’s platform. More about PowerTradeCopier