XM Copy Trading Review

Many people say that Forex trading requires lots of capital, hard work, experience, and skills. But is there any truth to that? The short answer is yes. However, there is an alternative that allows you to join Forex trading right away without any prerequisites. How? By using a form of social trading called Copy Trading at XM broker.

What is XM Copy Trading?

As the name suggests, Copy Trading refers to a form of social trading where you can copy someone else’s trades.

This is an ideal trading method for inexperienced traders to trade Forex hassle-free. That way, they do not need to learn various charts and market conditions to form their own trading strategies. Instead, they can just follow an expert and copy his strategies for their trades.

Experienced traders can also use copy trading to earn more money by sharing their strategies. This will enable them to test different strategies to make their trades even more exciting.

How does XM Copy Trading work?

There are two types of XM Copy Trading accounts to choose from, namely Investor and Strategy Manager.

👍 1. Investor

This account is suitable for new traders who do not feel confident about their trading skills but want to join Forex trading right away.

As an Investor, first, you invest some money and choose an expert to follow his strategies. When you copy the expert’s trades, they will be replicated in your portfolio. Then, you have to wait and monitor the trades, and if the trades are profitable, you will get your profits and pay a commission to the expert.

You can also follow different traders (Managers) to diversify your trading portfolio and benefit from various trading strategies simultaneously. That way you can maximize your profits and minimize your pesky losses! Remember, no matter how good a professional trader is, they will inevitably make mistakes.

👍 2. Strategy Manager

The Strategy Manager is the expert whose trades you will copy. Instead of investing money, Strategy Managers share their strategies so other traders can follow them in exchange for an agreed-upon commission.

As a Strategy Manager, you can take your trades to the next level by doing your usual trades while earning some money on the side in the form of a Copy Trading commission.

Is XM Copy Trading a safe option for traders?

XM Copy Trading platform is easy to use and allows new traders to learn from experienced traders. This kind of trade is beneficial for new traders since they can participate in the market right away, learn various strategies from expert traders, and then develop their own.

As we all know, no investment is without risk and Copy Trading is no exception. Of course, you can earn money and learn from the best, but you can also lose your money since nothing in the FX market is guaranteed. A great way to avoid or at least minimize your losses is by using tools like Stop Loss to monitor your trades carefully.

How to Use XM Copy Trading Platform?

To start using the XM Copy Trading platform, you have to register as a member at XM and verify your identity. Afterward, you just need to sign up either as an Investor or a Strategy Manager. Then, you can follow successful strategies offered by experts or share your own, and that’s all there is to it!

Once you are logged in your Member area, on the left-hand side, you will see a menu containing Copy Trading, Portfolio, Competitions, Social Feed, Settings, and FAQs, as illustrated below:

The Copy Trading menu showcases a list of Strategy Managers along with their performance charts, returns, numbers of investors following them, percentage fees, and so on. You can also choose them based on asset categories, best performers, most popular Strategy Managers, trading frequency, risk score, and strategy type.

After familiarizing yourself with the page, you can decide whether you want to be an Investor or a Strategy Manager.

Investor: How to follow a strategy:

Following a strategy is easy. Do the following steps and you will be all set:

🟢 Open an Investor account via the Members’ Area. If you are not automatically registered as an Investor, click the “Create Investor” button in the top right-hand corner. Make sure that you have verified your identity before doing this.

🟢 Choose a Strategy Manager who you want to follow based on the available information. You can also click on different Strategy Managers to examine their performance in terms of leverage, fees, minimum investment, number of investors, total investment, performance chart in different time frames, portfolio, asset allocation, and so on.

🟢 After following a Strategy Manager, you can copy their trades manually.

🟢 You can enter your investment amount based on the multiplier formula as follows:

For example, you want a multiplier of 0.5 and your Strategy Manager opens a position of 1 lot. In that case, your Investor account will open 0.5 x 1 lot = 0.5 lots.

Aside from the above steps, there are several important factors you should be aware of:

👍 An Investor account is only accessible from the XM web platform or mobile.

👍 One client can only have 1 Investor account, but they can copy unlimited strategies.

👍 An Investor account is only available in USD, with leverage of 1:300. This account can be used for Micro lots and comes with the same spreads (as low as 1 pip) and swaps as the Standard account.

👍 You can fund your Investor account similar to other account types via Members’ Area, direct deposit, or internal transfer from your other XM accounts.

👍 When you copy open positions, trades that have been placed by your Strategy Manager will be replicated for you at the prevailing market prices. If the positions are not available at the time of copying, they will be copied once the markets are open.

👍 You can pause a strategy, and if you do, no new positions will be opened until you resume it. However, if your Strategy Manager closes a position when you pause the strategy, that position will still be closed on your account.

👍 The minimum trade sizes for an Investor account are 0.1 lots for indices and 0.001 lots for other trading instruments. If your trade size is below that, no position will be opened.

👍 The minimum investment for copying trades is 50 USD. However, a Strategy Manager can decide his own minimum investment amount, so it may be higher than 50 USD.

👍 An Investor account has a margin call of 50% and stop out of 20%. This will be reflected on the progress bar on your XM Copy Trading platform.

👍 As of now, Stock CFDs are not available for copy trading. However, they may become available in the future.

Strategy Manager: How to create a strategy

If you want to become a Strategy Manager, you can create your strategies by doing the following steps:

🟢 Open the Strategy Manager Area on the left side.

🟢 Click the “Create Strategy” button at the top of the page.

🟢 Fill in the details of your trading account.

🟢 Fill in the details of your strategy, including the desired commission and optional password, and decide whether you want to import history from your existing XM accounts.

🟢 Your strategy can now be followed!

As a Strategy Manager, here are a few things you should be aware of:

👍 XM Copy Trading platform is compatible with both MT4 and MT5, so you can publish them easily.

👍 Your strategies are only visible to Investors if they have more than 150 USD of equity.

👍 A Strategy Manager can open up to 10 Strategy Manager accounts.

👍 In the Strategy Manager area, a wide range of important information is available, such as details of your strategy (password, currency, number of investments, risk score, fee, fees received, investor, etc.), statistics of return and profitability, risk figures, trading frequency, asset allocation, and fee details.

👍 There are no maximum followers or commissions. However, the maximum commission percentage is 50% of your Investors’ profits.

👍 The commission is paid according to your account currency. So, if Investors have a different base currency, it will be converted automatically.

How are the fees calculated?

The fee calculation at the XM Copy Trading platform is a little bit unique. The good news is that an Investor only needs to pay if the trades are profitable and above the previous high-water mark. Yes, the fees are calculated using the High-Water Mark model.

The high-water mark means the highest value that an investment has reached. Let’s use the following example to help you understand the process better.

After following a Strategy Manager, you open your first trade. When Trade 1 is profitable, you are to pay a commission based on the percentage decided by the Strategy Manager. Let’s say in this trade the high-water mark is 100 USD (HWM 1).

Then, you decide to open the second trade which is again profitable with a 200 USD high-water mark (HWM 2). In this case, a commission will be charged.

In the third trade, you lose some money so you will not have to pay any commission. In Trade 4, you gain some profits again, but with a high-water mark lower than the previous one (HWM 2). That means there is no commission for this trade.

The last trade is also profitable with a higher high-water mark at 250 USD (HWM 3). Since it is higher than the previous one, you are to pay a commission.

Remember that the fee is calculated and paid daily, while the maximum percentage a Strategy Manager can charge is 50%.

What are the advantages of XM Copy Trading?

As a form of popular social trading, XM Copy Trading comes with various benefits for both Investors and Strategy Managers.

🙂 Investors

✅ 1. Start Right Away

As previously mentioned, XM Copy Trading is a good choice for new traders who do not have much trading experience and skills. Since they only need to copy a Strategy Manager’s trades, they can start right away without having to learn from scratch or study how the markets move.

As an Investor, all you need to do is browse and find a Strategy Manager with a good track record for your trading goal, style, and financial capacity. Then, you can decide your investment amount and wait for the results.

✅ 2. Easy and Efficient

Not everyone has that much time to do manual trading since strategies require careful planning based on various factors. It also takes lots of time to study charts, market movements, news, and events. Even after opening a position, you still need to monitor it carefully to avoid losses.

XM Copy Trading is an easy and efficient way of trading since it is simple and does not take much time to set up. You can spend your time doing other things. However, as convenient as this method is, you still need to monitor your copied trades to make sure that you earn profits instead of losses.

✅ 3. A Way to Learn

One of the good things about the XM Copy Trading platform is that you can learn by practice. Most Strategy Managers are experienced traders with years of experience under their belt. By watching and copying their strategies and trades, you can see how they develop their strategies and handle market movements.

You can consider the charged commission as a fee for your trading education. After you feel more confident about your skills, you can try your hands at developing your own strategies step by step.

🙂 Strategy Managers

✅ 1. Larger Income

This is one of the reasons why many experienced traders join the XM Copy Trading program. By participating in copy trading, you can get a certain amount of commission for every successful trade that you make.

You can get up to 50% profit share by allowing your strategies to be copied. The more Investors follow your strategies, the more fees you will earn for your profitable trades.

✅ 2. Try New Strategies

As a professional trader, you may want to experiment with some strategies for which you do not have the required capital. In that case, the XM Copy Trading program could be the way to do it without having to risk too much of your own money.

Bear in mind that when you try new strategies using your followers’ capital as well as your own, this way the burden of responsibility is twice as much and the results will still reflect on your performance. So, make sure to try out your strategies carefully to avoid losses and reputational damage.

Even though XM Copy Trading is a good way for new traders to start, remember that Strategy Managers’ past performance does not guarantee their future success. After all, you are entrusting your savings to a stranger. That is why, you always need to monitor your funds' progress and quickly deal with the changes if necessary. And the most important thing, do not only rely on copy trading – you still need to learn how to trade if you want to join the Forex market as a decent trader.