In Forex Trading the term Copy Trading means directly copying the trades of another trader through your trading platform. It is similar to Mirror Trading but different, in that Copy Trading copies another trader where Mirror Trading copies another trader’s strategy. There is a slight but significant difference between the two types of Forex trading. Many brokerage websites list their top traders and invite newer traders to copy them. That is different from Mirror trading because in Mirror trading the strategy is what is automatic so there is little room for human input but in copy trading a trader is copying not only the strategy of the more experienced trader but the changes made by the human as well.
Copy Trading falls into the category of Social Trading so it is usually done through platforms that are specifically social trading platforms. The investor opens a personal account through a brokerage that offers a social trading platform. Even though the trader is leaving himself open to whatever happens to the more experienced trader, he never actually gives the trader he is copying any money. There are brokerages who specialize in copy trading and have specialized platforms for this purpose. Either way, in order to start Copy Trading you need to choose a broker.
Forex Signals are trades to copy. As a Forex trader, you can either completely copy a trader and they become your Signal Provider or you can copy multiple signals. If you are Copy Trading, you need to choose a Signal Provider then the way it will work is that once you chose a signal provider, your Copy Trading platform takes the data from his broker and once it verifies all the Copy Traders using that Signal Provider, the platform makes the same trades, proportionally, for you and anyone else copying the same trader.
MetaTrader 4, which is one of the most popular Forex trading platforms available. It has a service that allows traders to subscribe to a specific Signal Provider. After you subscribe to the specific Signal, your trades will copy those signals. A different option is to use a free service which provides Forex Signals. There are many brokerages which claim that using their free signal service will be just as effective as using a platform which is connected to a Signal Provider.
There are also professional traders who will charge for their Signals. If you have not studied that professional’s trading strategy it could be a mistake. You need to make sure you know how they arrive at their trading decisions so that you do not get scammed. Following Forex Signals is different than automated trading because you as a trader get to make a decision with each and every signal. The downside is that you have to watch these signals constantly and carefully and decide on the spot to make the trade or not to make the trade. It can be much more stressful than Copy Trading or Automated Mirror Trading although it gives you much more control. Whether or not this is the trading style for you depends a lot on your personality.