Best copy trading platforms

What is copy trading?

Copy trading is an investment method that allows traders, whether beginners or experienced, to automatically replicate the strategies of other, more seasoned investors. This approach is particularly popular in CFD (contracts for difference), cryptocurrency, Forex, and stock trading.

How copy trading works

The principle of copy trading is simple: an investor (called a "copier") selects an experienced trader (called a "strategy provider") and configures their account to automatically replicate their positions. When a copied trader opens or closes a position, this action is replicated in real-time on the copier's account, in proportion to the capital invested.

Why Choose Copy Trading?

Copy trading offers several advantages, including:

• Accessibility: It allows beginners to invest in the financial markets without needing advanced trading knowledge.
• Time-saving: Investors do not need to analyze the markets themselves or make complex decisions.
• Diversification: It is possible to copy multiple traders and thus spread the risks.
• Progressive learning: By following the strategies of experienced traders, investors can understand the mechanisms of the market and refine their own trading strategy.

What is a copy trading platform?

A copy trading platform is an online service that allows investors to automatically copy the strategies of more experienced traders. These platforms act as intermediaries between professional traders (or strategy providers) and investors wishing to replicate their operations.

They offer risk management tools, performance tracking features and customization options to adapt the copy trading strategy to one's own financial goals.

Copy trading platforms work by connecting users' accounts to those of the traders they want to follow. Here are the main steps:

• Registration on the platform: The user creates an account and deposits funds.
• Selection of a trader to copy: The user can filter traders based on their performance, risk level, trading style, and other criteria.
• Configuration of parameters: The user chooses the amount they wish to invest and adjusts parameters such as the risk level or leverage.
• Automation of transactions: Once copy trading is activated, the selected trader's positions are automatically replicated in the investor's account.

Copy Trading vs. Social Trading: What are the Differences?

Copy trading and social trading are often confused, but they have notable differences. Both allow investors to draw inspiration from the strategies of other traders, but their approach and operation vary.

• Copy trading is an automated process where an investor directly copies the trades of an experienced trader. Once the strategy is chosen, the orders are replicated without manual intervention.
• Social trading, on the other hand, relies more on the exchange of information and individual decision-making. Traders share their analyses, strategies, and performance, but each investor manually chooses the transactions they want to execute.

What social trading solutions are offered by brokers in the Philippines?

In the Philippines, several brokers offer social trading and copy trading solutions, allowing investors to follow and copy the strategies of experienced traders. These solutions are often integrated directly into trading platforms or accessible via specialized software. Here's an overview of the most popular software and the brokers that offer them.

How to Choose a Copy Trading Platform?

Choosing a copy trading platform is an essential step to maximize your chances of success while limiting risks. Several criteria must be taken into account to select the platform best suited to your needs and investor profile.

1. Regulation and Security

When selecting a copy trading platform in the Philippines, it's crucial to ensure that the platform operates under the oversight of reputable financial regulatory authorities.

• Securities and Exchange Commission (SEC): The SEC is responsible for regulating securities and capital markets in the Philippines. It oversees the registration and supervision of corporations and securities, ensuring investor protection and market integrity.
• Bangko Sentral ng Pilipinas (BSP): The BSP serves as the central bank of the Philippines and regulates financial institutions, including those dealing with virtual assets. It ensures monetary stability and supervises banks and other financial entities.

2. Traders Available for Copying

The diversity and quality of the traders offered are key elements. It is advisable to choose a platform that offers filtering tools to analyze the performance of traders:

• Historical performance
• Risk level
• Trading strategy (short term, long term, scalping, etc.)
• Maximum Drawdown

Some platforms also offer performance scores to make it easier for traders to choose who to copy.

3. Accessible assets and markets

Filipino traders have access to a diverse range of financial instruments through various trading platforms. When choosing a copy trading platform, consider the variety of assets available to ensure alignment with your investment goals.

• Forex: Major currency pairs like USD/PHP, EUR/USD, and GBP/USD are popular among Filipino traders.
• Stocks: Investors can trade shares of both domestic and international companies. The Philippine Stock Exchange Index (PSEi) includes prominent Filipino companies like SM Investments Corporation, Ayala Corporation, and BDO Unibank.
• Indices: Global indices such as the S&P 500, FTSE 100, and Nikkei 225 are accessible, allowing traders to diversify their portfolios across different markets.
• Commodities: Platforms offer trading in commodities like gold, silver, crude oil, and natural gas, providing opportunities to hedge against market volatility.
• Cryptocurrencies: Digital currencies such as Bitcoin, Ethereum, and Ripple are increasingly popular. However, it's essential to note that cryptocurrency trading is subject to specific regulations, and traders should ensure compliance with local laws.

4. Fees and Commissions

Copy trading platforms apply different fee structures, which can impact your profitability. Here are the main costs to analyze:

• Spread: The difference between the buying and selling price of an asset.
• Commission per trade: Some brokers charge a percentage on each transaction.
• Inactivity fees: Fees may apply if you do not make transactions for a certain period.
• Profit sharing: Some platforms charge a percentage of the gains made through copy trading.

5. Features and User Experience

A good copy trading platform should offer an intuitive interface and powerful tools to manage your investments effectively. Key features to look for include:

• Demo account: Test the platform with a dummy account before investing real money
• Risk management tools: Stop-loss, take-profit, adjustment of invested capital
• Advanced charts and graphs: Real-time analysis of the performance of copied traders
• Mobile application: Access investments on the go

6. Platform Reviews and Reputation

Checking user reviews and ratings on specialized sites like Trustpilot or trading forums provides an overview of the advantages and disadvantages of each platform. Prioritize those with a good reputation in terms of:

• Reliability of transactions
• Responsive customer service
• Ease of withdrawing funds

7. Customer Service and Support

Good customer support can make all the difference in the event of a technical problem or a question about how copy trading works. Check the following:

• Contact channels (online chat, email, phone)
• Availability (24/7, opening hours)
• Support language (English)

What Assets Can You Trade with Copy Trading?

Copy trading allows you to invest in a wide range of financial assets, depending on the markets offered by the chosen platform. Some assets are more suitable for copy trading strategies due to their liquidity and volatility. Here is an overview of the main assets accessible via copy trading.

How to Practice Copy Trading with an Online Broker?

Copy trading with an online broker is a simple process that allows investors to copy the strategies of experienced traders. Here are the main steps to get started and optimize your copy trading experience.

1. Choose a Broker Offering Copy Trading

Not all trading platforms allow copy trading. It is therefore essential to choose a broker that offers this functionality and is regulated by a recognized financial authority (Securities and Exchange Commission of the Philippines, etc.). Some of the most popular platforms include eToro, ZuluTrade, MetaTrader 4/5 (with signals), DupliTrade and Myfxbook AutoTrade.

Criteria to check before choosing a broker:

• Regulation and security of funds
• Available assets (Forex, stocks, cryptos, indices...)
• Fees and commissions applied
• Quality and number of traders to copy
• Risk management tools and platform ergonomics

2. Create an Account and Verify It

Once the broker has been selected, you must open a trading account by providing personal information and completing the KYC (Know Your Customer) verification, which involves submitting:

• A valid ID
• Proof of address
• A payment method to deposit funds

Some brokers allow access to a demo account, which is useful for testing the platform and its interface before investing real money.

3. Deposit funds into your trading account

After account validation, the investor must fund their trading account. Brokers generally offer several deposit methods:

• Credit card (Visa, Mastercard, etc.)
• Bank transfer
• E-wallets (PayPal, Skrill, Neteller, etc.)
• Cryptocurrencies (on some platforms)

The minimum deposit amount varies depending on the platform (from PHP3,000 to several thousand pesos depending on the broker and the chosen asset).

4. Select a trader to copy

Choosing the trader to copy is a key step to succeed in copy trading. The platforms provide various criteria to analyze traders:

• Past performance (returns over several months/years)
• Risk level (the more risk a trader takes, the greater the variations in their capital)
• Strategy used (short term, swing trading, scalping...)
• Maximum drawdown (maximum loss recorded)
• Number of copiers and reputation

Certain platforms like eToro assign risk scores to traders, allowing you to assess the stability and reliability of their strategy.

5. Define the Amount Invested and Adjust Parameters

Before copying a trader, the investor must decide on the amount they wish to allocate to this strategy. Several risk management options are available:

• Fixed amount to invest: choose a specific amount to be used to copy the trader
• Automatic stop-loss: define a maximum loss not to be exceeded
• Copy level adjustment: some platforms allow copying trades in proportion to the capital of the followed trader

6. Monitor and adjust your copy trading strategy

Copy trading is a passive method, but it is recommended to regularly monitor the performance of the copied traders and adapt your strategy if necessary.

Best practices for optimizing your copy trading:

• Diversify by copying multiple traders to limit risks
• Regularly check performance and adjust investments if needed
• Do not panic in the face of market fluctuations and remain consistent with your strategy
• Train in parallel to better understand how the market works

What are the fees of brokers offering copy trading?

Copy trading platforms apply different types of fees that can affect investor profitability. It is essential to fully understand these costs before choosing a broker, as they vary depending on the platform and the assets traded. Here is an overview of the main fees encountered in copy trading.

1. Spreads: an indirect cost on each transaction

The spread is the difference between the buying price (bid) and the selling price (ask) of an asset. It is an indirect cost that the broker automatically integrates into each transaction, which means that the investor must cover this cost before being profitable on a trade. The higher the spread, the higher the cost of trading.

Example of spread on copy trading

An investor copies a trader who opens a position on EUR/USD with a spread of 1.5 pips. This means that when the position is opened, they are immediately at a slight loss equivalent to those 1.5 pips. If the market does not move sufficiently in their favor, the transaction may not be very profitable.

2. Transaction Fees: A Percentage or a Fixed Amount

Some brokers apply a commission on each transaction made, in addition to the spread. This commission can be a fixed amount per order executed or a percentage of the amount invested. Brokers that use this model often offer tighter spreads.

Example of copy trading commission

An investor copies a trader specializing in stocks. For each purchase or sale of a stock, a commission of 0.1% is charged.

• If they invest ₱1,000 in a stock, they will pay ₱1 in fees when opening the position.
• If they close this position later for ₱1,200, they will pay a commission of ₱1.20 again.

Thus, their total fees on this transaction will be ₱2.20.

3. Management or Performance Fees: A Portion of Profits Returned to the Broker

Some copy trading platforms charge a commission on the profits made from copied positions. This model is generally used by brokers who offer professional traders to copy and who apply a profit-sharing policy.

Example of management or performance fees

A broker applies a performance fee of 20% on the gains generated via copy trading.

• If an investor makes a profit of PHP 29,134.75 by copying a trader, they will have to pay PHP 5,826.95 to the broker (20% of PHP 29,134.75).
• They will therefore have PHP 23,307.80 net of fees.

This type of fee is often justified by the quality and expertise of the traders offered by the platform.

4. Inactivity fees: a cost for unused accounts

Brokers sometimes impose inactivity fees if a trading account remains inactive for an extended period (often 3 to 12 months). These fees are charged monthly as long as the user does not perform any transactions.

Example of inactivity fee

A broker applies an inactivity fee of PHP 600 per month after 6 months of no trading activity.

• An investor who has not used their account for 8 months will have to pay PHP 1200 in cumulative fees.
• To avoid these fees, they can simply make a transaction before the deadline.

This type of fee is particularly important to monitor if you plan to use a platform occasionally.

5. Withdrawal fees: a cost to recover your earnings

Some brokers charge fees on cash withdrawals, especially when the investor uses a bank transfer. These fees can be fixed or proportional to the amount withdrawn.

Example of Withdrawal Fees

An investor wants to withdraw ₱30,000 from their trading account. The broker applies fixed fees of ₱300 on each withdrawal.

• In the end, the investor will receive ₱29,700 in their bank account.

These fees can be avoided or reduced by choosing platforms that offer free withdrawals or by using alternative payment methods such as e-wallets (PayPal, Skrill, Neteller).

Is copy trading suitable for beginners?

Copy trading is often presented as an ideal solution for novice investors, as it allows them to automatically copy the strategies of experienced traders. However, although this method facilitates access to financial markets, it is not entirely without risk. Here's an overview of the advantages and limitations of copy trading for beginners.

The advantages of copy trading for beginners

• No expertise required: Unlike traditional trading, which requires in-depth market analysis, copy trading allows beginners to invest without having to master technical concepts such as technical or fundamental analysis.
• Progressive learning: Observing the strategies of experienced traders allows novices to understand market mechanisms and learn how to better manage risk over time.
• Time saving: Since copy trading is automated, there is no need to constantly monitor the markets. Orders are executed in real time, without manual intervention.
• Simplified diversification: Platforms allow you to copy multiple traders at the same time, which offers a better distribution of risk and avoids putting everything on a single strategy.
• Access to different asset classes: By copying several specialized traders, it is possible to invest in various assets (Forex, stocks, cryptos, commodities, etc.) without requiring in-depth knowledge of each market.

The Limits and Risks for Beginners

• Dependence on the performance of copied traders: Copying a trader does not guarantee profits. Even experienced traders experience losses, and it is possible to copy a strategy that proves ineffective in the long term.
• Lack of control over investment decisions: Unlike manual trading, copy trading leaves little room for personalization. The investor automatically follows the decisions of the copied trader, which can be frustrating in the event of poor performance.
• Risk of amplified losses: Some traders use high leverage, which can lead to significant losses if the market moves unfavorably. It is crucial to carefully analyze the level of risk before copying a trader.
• Fees that can reduce profitability: Some brokers apply fees to copy trading (commissions, spread, performance fees, etc.), which can impact the profits of novice investors.
• The lack of guarantee of results: Even when copying a successful trader, the financial markets remain unpredictable. Past gains never guarantee future performance.

What strategy with copy trading?

Copy trading allows you to adopt different strategies depending on your investor profile, risk appetite, and financial goals. Some approaches favor stability and security, while others aim for higher profitability by accepting an increased level of risk.

How to Become a Trader to Follow for Social Trading?

Becoming a trader to follow on a social trading platform requires much more than just financial performance. You must demonstrate a reliable strategy, good risk management, and transparency that inspires confidence in investors wishing to copy your transactions.

First, it is essential to define a clear and reproducible trading strategy. Investors favor traders whose performance is stable and consistent over the long term. Whether it's scalping, swing trading, or long-term investing, a well-defined approach applied rigorously increases credibility. Good risk management is also crucial: limiting drawdown, avoiding excessive leverage, and not exposing all of one's capital on a single position reassures potential copiers.

Transparency is another key element. The most followed traders on copy trading platforms regularly share their analyses, decisions, and results. Publishing updates, explaining their positions, and being active in the community helps attract copiers and retain existing ones.

Finally, a regular presence and interaction with copiers strengthens investor confidence. Some brokers even offer financial incentives to traders with a large number of followers. The more the trader inspires confidence, the more likely they are to be copied and increase their income via copy trading.

What is the taxation on income from copy trading in the Philippines?

In the Philippines, profits derived from copy trading are subject to taxation. The specific tax treatment depends on factors such as the nature of the trading activity, the type of assets involved, and the holding period.

Income Tax on Trading Profits

The Bureau of Internal Revenue (BIR) classifies trading activities, including copy trading, as a business or profession. Consequently, profits from such activities are considered ordinary income and are taxed according to the prevailing income tax rates. As of 2023, the income tax rates for individuals are as follows:DailyForexWikipédia

• 0% for annual taxable income up to ₱250,000
• 15% for income over ₱250,000 up to ₱400,000
• 20% for income over ₱400,000 up to ₱800,000
• 25% for income over ₱800,000 up to ₱2,000,000
• 30% for income over ₱2,000,000 up to ₱8,000,000
• 35% for income over ₱8,000,000

Traders can deduct allowable expenses related to their trading activities, such as costs for equipment, software, and educational materials. 

Capital Gains Tax on Securities

Gains from the sale of shares of stock not traded on the Philippine Stock Exchange (PSE) are subject to a capital gains tax (CGT) of 15%. For shares listed and traded on the PSE, a stock transaction tax (STT) of 0.6% of the gross selling price is imposed instead of CGT. 

Taxation of Cryptocurrency Gains

The taxation of cryptocurrency transactions in the Philippines is evolving. Currently, profits from the sale or exchange of cryptocurrencies are subject to a capital gains tax of up to 15%. If cryptocurrencies are held as inventory by businesses, the gains may be considered ordinary income and taxed accordingly. 

Additionally, if the sale or exchange of cryptocurrencies is conducted in the ordinary course of business and meets the VAT threshold, it may be subject to a 12% value-added tax (VAT). 

Reporting and Compliance

All income from copy trading activities must be reported in the annual income tax return. Traders should maintain detailed records of all transactions, including dates, amounts, and related expenses, to ensure accurate reporting and compliance.

Given the complexities and evolving nature of tax regulations, especially concerning digital assets, it's advisable to consult with a tax professional or the BIR for guidance tailored to individual circumstances.

P. Laurore

Finance expert

Co-founder of HelloSafe and holder of a Master's degree in finance, Pauline has recognised expertise in personal finance, which she uses to help users better understand and optimise their financial choices. At HelloSafe, Pauline plays a key role in designing clear, educational content on savings, investments and personal finance. Passionate about financial education, Pauline strives, with every piece of content she oversees, to provide reliable, transparent and unbiased information for independent and informed financial management. To this end, she has tested over 100 trading platforms to help internet users make the right choices.