Copy Trading

Hi All

I note that certain apps such as eToro have a copy trading ability where you can copy the trades of a trader you like automatically. I get that eToro is more of a social trading app and therefore this is unlikely to be the direction Freetrade is heading, however I wanted to discuss the idea of Copy Trading and whether people think it’s a good feature or a bad one.

Personally it makes me feel a bit uneasy, could be very risky for you if they change strategy to one that doesn’t suit your goals. Feels a bit like an unregulated mutual fund. (Admittedly without the fees)


That is true. But I suppose everything is a risk

I can’t help but think this would be taking all of the worst parts of active fund management, i.e. a huge amount of people looking at past performance and survivor bias. Except instead of a manager creating 10 funds and then marketing the one that lands you have 10,000s of portfolios to cherry pick from.

I think you’d see lots people just following the top few performers from the last couple of years (which is basically going to be people with massive Tesla positions and the like)

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Yeah, you’d suspect that in many cases copy trading ends up looking like short-term momentum trading.

There are startups trying to do that kind of thing with rigour (tho I forget their names).