Trading is no doubt a complex field but it also facilitates traders from different trading tools. One such tool is copy trading. It helps beginners to copy the trades of other traders and execute successful trades without spending time learning this tool. But the one question that each trader asks is How much do I really need to get started? Itâs a good question but answering in a single sentence is difficult because the earnings depends on different factors including the platform you use, the traders you follow, and your risk tolerance. So letâs discuss the whole process and get the answer to this question so you know exactly what to expect.
What Is Copy Trading and Why Is It So Popular?
Before we go into the money side of things, letâs quickly discuss what copy trading actually is. In simple terms, it helps you to automatically copy the trades of experienced traders. You donât need to spend years studying charts, support resistance indicators, and market trendsâjust find a trader you like, allocate some funds, and let their strategy play out in your account. You may feel very easy to hear this no doubt it can be. But just like any type of trading, there are risks involved and your results will depend on the traders you follow.
The Minimum Deposit: Whatâs the Absolute Least You Need?
Most copy trading platforms have a minimum deposit requirement which varies from platform to platform. Some platforms help you start with as little as $10 while others require at least $200 or more. Some popular platforms include eToro, Zulutrade, NAGA, and MetaTrader via brokers like Pepperstone, IC Markets, etc. So technically, you can start copy trading with a very small amount. But should you? Thatâs a different story.
How Much Should You Really Start With?
Just because you can start with $10 or $50 doesnât mean itâs a good idea. Hereâs why:
- Risk Management Becomes Difficult: If you only have $50 in your account then a single bad trade can wipe out a huge chunk of your capital.
- Some Traders Have Higher Minimums: Many top traders set a minimum copy amount like $200 or more so you might not be able to copy the best ones with a small account.
- Diversification Is Limited: A bigger account lets you spread your risk across multiple traders instead of relying on just one.
If youâre serious about making money through copy trading then aim to start with at least $500 to $1,000. This gives you enough room to manage risk properly and follow traders with solid track records.
Breaking Down the Costs
Besides the initial deposit, there are a few other costs to consider:
Spreads and Commissions
Some platforms charge a small commission on each trade while others make money through spreads that is the difference between the buy and sell price. These fees can impact your profits over time.
Performance Fees
Some traders charge a percentage of the profits they generate for you. This is more common on platforms like Darwinex or Myfxbook Autotrade.
Withdrawal Fees
Always check a platformâs withdrawal fees before signing up. Some charge a fixed fee per withdrawal while others take a percentage.
Inactivity Fees
If you donât trade for a while then some platforms will start charging an inactivity fee. Itâs usually small, but itâs something to keep in mind.
How to Choose the Right Amount Based on Your Goals
Now that weâve covered the basics, letâs talk about how much you should start with based on your personal goals.
You Just Want to Test the Waters
If youâre brand new to copy trading and just want to experiment then starting with $100 to $250 is fine. This lets you get a feel for how it works without risking too much.
You Want to Make Some Side Income
If youâre looking to generate a small but consistent side income then a starting balance of $500 to $1,500 is more reasonable. This allows for better risk management and lets you copy multiple traders.
You Want to Scale and Make Serious Profits
If your goal is to eventually replace your income or make significant returns then youâll probably need $5,000 or more. At this level, you can copy multiple high-performing traders and compound your profits over time.
How to Manage Risk When Copy Trading
No matter how much money you start with, risk management is key. Here are a few tips to keep your losses in check:
- Diversify: Donât put all your money on one trader. Spread it across at least 3-5 traders with different strategies.
- Set Stop Losses: Some platforms allow you to set a stop loss on your copied trades. Use this feature to limit potential losses.
- Start Small, Scale Up: If youâre unsure, start with a small amount and increase it gradually as you gain confidence.
- Monitor Performance: Keep an eye on the traders youâre copying. If they start underperforming, donât hesitate to stop copying them.
As the editor of the blog, She curate insightful content that sparks curiosity and fosters learning. With a passion for storytelling and a keen eye for detail, she strive to bring diverse perspectives and engaging narratives to readers, ensuring every piece informs, inspires, and enriches.
