What Is Copy Trading? A Plain-English Guide

By Rise Together FX team · 13 min read

Diagram of a master trading terminal with arrows copying the same trade ticket into three follower terminals

Copy trading means linking a trading account to someone else's so that when they open or close a trade, a matching trade opens or closes in the linked account. This guide explains, in plain English, how that works, who controls what, where the money sits, what it costs and where the risks are.

Trading forex and CFDs is high risk and you can lose all the money you put in. Most retail CFD accounts lose money. This article is general education, not financial advice.

Copy trading in one paragraph

In copy trading, one account (often called the master, lead or provider account) places trades. Software then repeats those trades in one or more follower accounts, usually automatically and within moments. The follower doesn't choose individual trades. They choose whose trades to copy, how large the copied trades should be relative to the original, and when to stop. Copy trading is most common in forex and CFDs (contracts for difference), which are leveraged products, so gains and losses can both be large relative to the money in the account. The international body of securities regulators, IOSCO, notes that copy trading tends to focus on forex, crypto-assets and other complex or volatile products.

How a copy works: master account, follower account and copier software

Every copy-trading setup has the same three parts, whatever it is called.

The master account

This is the account whose trades are copied. It might be run by an individual trader, by a firm, or by an automated program (an "expert advisor" or algorithm). The master account's trading rules are the strategy you are exposed to.

The follower account

This is the account that receives the copied trades. Depending on the setup, it may be an account on a platform that offers copying as a built-in feature, or a trading account in the follower's own name at a broker, connected to an outside copier.

The copier software

The copier watches the master account. When a trade opens there, it sends a matching order to each follower account. When the master closes the trade, the copier closes the follower's version. You can read how this works step by step in How does a trade copier work?

How the trade size is set

Copiers rarely copy the exact same trade size, because follower accounts are usually smaller or larger than the master. Common methods are:

Proportional sizing: the copied trade is scaled to the follower's balance or equity compared with the master's.
Fixed size: every copied trade uses the same size, whatever the master trades.
Multiplier: the proportional size is multiplied up or down (for example 0.5× or 2×).

Illustrative example (made-up numbers to show the mechanics; not based on any real account or on our strategy): a master account with a balance of £10,000 opens a trade of 1.00 lot. A follower account with £2,000, copied proportionally, would receive a trade of about 0.20 lots, because £2,000 is one-fifth of £10,000. If the follower set a 2× multiplier, the copied trade would be about 0.40 lots, and every price move would hit that account twice as hard.

The size setting matters more than many people expect. A larger multiplier doesn't change the strategy; it changes how much of the account each trade puts at risk.

Copy trading vs social trading vs mirror trading vs signals

These terms overlap, and regulators admit they are often used interchangeably. IOSCO's 2025 report describes them as sitting on a spectrum, depending on how much is automated and how much the trader decides.

Term	What happens	Who places each trade?
Copy trading	A follower chooses one or more lead traders and their trades are repeated in the follower's account, usually automatically.	The copier, automatically, once the follower has set it up.
Mirror trading	Similar to copy trading but with more automation: all trades of a chosen strategy or algorithm are copied, with less choice over which trades to follow.	The system, automatically.
Social trading	Traders share ideas and trades in an online community. Others may act on them, but each person decides for themselves.	Each trader, manually.
Trading signals	A provider sends trade ideas (for example "buy X at Y, stop at Z"). The receiver decides whether to act.	The receiver, manually (unless they connect the signals to automatic execution, which turns it into copying).

The key question is always: does a trade happen in your account without you approving it first? If yes, it's copying or mirroring. If you have to act on each idea yourself, it's closer to social trading or signals. We compare these in more detail in Copy trading vs signals vs PAMM and MAM accounts.

What you control and what you don't

Copy trading is often described as if the follower gives up all control. That isn't quite right, but nor is the opposite. Here's the honest split.

Usually in your control

Whose trades you copy, and whether to keep copying.
How much money is in the account. The money in the follower account is exposed to the copied trades, and you could lose all of it. With a broker that doesn't offer negative balance protection, you could lose more than you put in.
Size settings, such as a multiplier or fixed size, where the copier offers them.
Stopping. You can usually disconnect from the copier or ask the provider to stop.
Closing trades yourself. In most setups, the account holder can close open trades manually in their trading app.

Usually not in your control

Which trades are opened, when, and how many. That is decided by the master account.
Market prices. No setting stops prices moving against open trades.
The exact price you get. Copied trades can fill at a slightly different price from the master's (see slippage below).
What happens to trades already open when you stop. Disconnecting from a copier may stop new trades without closing existing ones. Closing trades part-way through can lock in a loss, and closing only some of a group can leave the rest exposed. Ask how stopping works before you need to.

Access and passwords

Some copiers need full trading access to the follower account. On MetaTrader 5, the platform used by many forex brokers, there are two kinds of password: the master password, which gives full access including trading, and the investor password, which gives read-only access with no trading. A service that only needs to show your account can use the investor password. A service that needs to place trades in your account needs trading access, so it's worth knowing exactly what you're handing over and how to take it back.

Where your money is held and who can move it

There are two broad models.

Platform model. You deposit money with a platform or broker that has copy trading built in. Your money sits with that firm, and copying happens inside its system.
Own-account model. You open a trading account in your own name with a broker, and a separate copier connects to it. Your money sits with the broker; the copy provider places trades but doesn't hold the money.

In both models, it's worth separating two questions:

Who can withdraw money? Usually only the account holder, through the broker's or platform's own portal.
Who can lose money for you? Anyone who can place trades in the account. A provider who can't withdraw a penny can still open trades that lose most or all of the balance.

The other question is which company actually holds the money, and where it is authorised. The FCA advises checking a firm's terms and conditions to see the actual company you'd be contracting with and where it's incorporated, and warns that you may lose protections when dealing with an overseas firm. The FCA also says that if you deal with an unauthorised firm, you won't be covered by the Financial Ombudsman Service or the Financial Services Compensation Scheme (FSCS).

Costs that exist in any copy setup

Whatever the provider, copied trades carry the normal costs of trading. These are charged by the broker or platform, not by the person you're copying.

Spread: the gap between the buying and selling price. Every trade starts slightly behind because of it.
Commission: some account types charge a fee per trade or per lot.
Swap (overnight financing): trades held overnight are usually charged, or occasionally credited, a financing amount.
Currency conversion: if the account and the instrument are in different currencies, conversion may apply.

On top of these, copy services themselves may charge in different ways. This guide doesn't cover any particular provider's charges; always ask for a full written list before you start. IOSCO's report points out that transaction costs from frequent trading can eat into gains or deepen losses, so a strategy that trades often pays these costs often.

The risks

Copy trading doesn't remove any of the risks of trading. It adds a few of its own. Our copy trading risks article goes deeper; here are the main ones.

Leverage

Forex and CFDs are traded on margin, meaning a small deposit controls a much larger position. Under FCA rules for retail clients of UK-authorised CFD firms, leverage is limited to between 30:1 and 2:1 depending on the asset. Even at those limits, a small price move can make a large difference to the account. Brokers outside the UK may offer much higher leverage, which magnifies losses further. Read more in What is leverage in forex?

Drawdown

Drawdown is the fall in an account's value from a high point to a later low. Every strategy has drawdowns, and a copied account goes through the same ones as the master, sometimes worse. A past maximum drawdown shows what has happened, not the most that can happen. See What is drawdown in trading?

Slippage and timing

The copied trade reaches the follower account slightly after the master's. In fast markets the price can move in that gap, so the follower can get a worse price. Over many trades, small differences add up, and the follower's results can differ from the master's.

The strategy itself

Copying a strategy means taking on its specific risks. Some strategies, such as grid and martingale approaches, can show many small wins and then a very large loss. Read Grid trading vs martingale before copying any strategy that adds trades as price moves against it.

Copier or connection failure

Copiers rely on software, servers and internet connections. If the connection breaks, trades may not open or close in the follower account when they should, leaving positions out of step with the master.

Past results

A track record shows what happened to one account over one period. It can't tell you what will happen next, and a follower who starts at a different time can get very different results. IOSCO also warns that some lead traders may promote falsified returns, so independent verification matters. See How to read a MyFXBook track record.

Your own decisions

Followers often stop copying after a run of losses, which can mean leaving at the low point, or increase their size after a run of wins, just before a bad patch. Copying doesn't remove the human side of trading.

How the UK regulator classifies copy trading

The Financial Conduct Authority (FCA) has a page on copy trading for firms. In short, it says:

The FCA classifies copy trading as portfolio or investment management where no manual input is clear from the account holder.
Where that applies to MiFID financial instruments, the service provider needs portfolio management authorisation from the FCA, with ongoing duties such as checking suitability and reporting to clients.
A client setting parameters, such as how much to invest or how much they're prepared to lose, doesn't change that classification.
Where the client has to approve each trade before it's placed, it isn't portfolio management, although other regulated services (such as investment advice) may still apply.

This tells you how firms are regulated. It doesn't tell you whether any particular service is suitable for you. We cover the legal position in more detail in Is copy trading legal in the UK?

Questions to ask before using any copy-trading service

This is a general checklist, not a recommendation to use or avoid any service.

Who is the firm, and is it on the FCA Register with permission for this activity? Is it on the FCA Warning List?
Which company holds the money, and in which country? What protections apply if that company fails?
What access does the service need? Read-only (investor password) or full trading access? How do you withdraw that access?
How is trade size set for the account? Proportional, fixed or multiplied? Who can change it?
What type of strategy is it? Does it add trades or increase trade size when price moves against it?
Is there an independent, verified track record? How long is it, and what was the largest drawdown? (How to read one)
What are all the costs? Spread, commission, swap and any service charges, in writing.
What happens when you stop, especially if trades are still open?
What is the worst realistic outcome? Could you lose all the money in the account?
Could you afford that loss? If not, that is an answer in itself.

Glossary of terms used

Short definitions of the terms in this guide. Our full glossary has more.

Master (lead) account: the account whose trades are copied.
Follower account: the account that receives copied trades.
Copier: software that repeats trades from one account in another.
Lot: a standard unit of trade size in forex.
Leverage: trading a position larger than the money deposited, using margin.
Margin: the money set aside by the broker to keep a leveraged position open.
Spread: the difference between the buying and selling price.
Swap: the overnight financing charge or credit on a position held past the daily cut-off.
Slippage: the difference between the expected price of a trade and the price actually received.
Drawdown: a fall in account value from a high point to a later low point.
Equity: the account balance plus or minus the profit or loss on open trades.
Stop out: when the broker automatically closes positions because the account no longer has enough margin.