If you are a newcomer in the trading world and want to avoid mistakes, copy trading is the best way to enter the live market. Though paper trading also gives you an opportunity to learn more and more. But in a real-time frame entry into the market may risk your account. Copy trading with an experienced trader making sure of earning money. Chances of more profit and fewer losses make your trade perfect. Thousands of traders asked about its legal status. They may ask about it:
Is copy trading illegal?
No, copy trading is not illegal in most countries, it is quite legal activity however its legitimacy converts into illegal action if you select an illegal broker or run a trade against the law of that country.
Different countries have different rules and regulations. If you want to start social or mirror trading you should read all the rules and regulations. For this, you may consult your lawyer. Let’s discuss its legitimacy in different countries.
What Is ‘’Copy Trading’’
For beginners, copy trading is very helpful and practical because new traders copy professional traders. In this type of trade, your account copies the deals of better-trained traders automatically.
In forex trading, use the technology to copy the forex signals of other forex traders you follow in a live market. Your trade is automatically replicated in your brokerage account every time they trade.
In this mode of trading, you directly observe the different moves of experienced traders and learn in the best way because all processes are completed in a live market.
Is Copy Trading Illegal
No, copy trading is perfectly legal. As a learner, if you enter the live market without the help of any trained mentor, you may face a huge loss. As with other legitimate processes, this also has rules and regulations. New traders that are interested in copy trading should search for a good broker’s permission and regular fees make it a lawful act.
So, being a safe and legal trade you can adopt this method very easily.
Is Copy Trading Safe
Like all other trades, it is highly risky, especially when blindly following it. This risk stays even when you follow the top performer. You have to choose a legal broker who abides by all rules and regulations of that country.
However, copy trading is the safest and most protected way for a profitable trade for beginners.
Is Copy Trading Illegal In the US
In the USA copy trading is a legal practice. For natives or residents of the USA, rules are more inflexible than for those who live in other countries.
These tight rules are due to the Dodd-Frank Act of 2010. This has two main clauses that affect copy trading.
- You cannot hedge trades by opening a contrary position in the identical asset without liquidating the initial position fully or partly.
- First In First Out (FIFO)
It is a rule that requires traders to liquidate numerous positions of the same asset in the same hierarchy they were taken, beginning with the oldest position.
The presence of these rules in the USA makes it dangerous for Americans who want to copy the trade of the trader from other countries.
If your trader does not obey these rules or even violates these you are accountable for this even if the trade is done automatically.
You have to choose a legal broker who abides by all rules and regulations of the USA.
Is Copy Trading Illegal In Malaysia
In Malaysia, forex trading is allowed but under strict Islamic conditions. You cannot trade with other funds. You are allowed currencies only by licensed institutions. These are run by Islamic laws. A broker or agent should be deemed too Islamic law and shariah-complaints. Some famous platforms that have good reputations with users worldwide are AvaTrade, eToro, and FXTM.
In Belgium, forex trading is not banned but you are allowed only if you are a professional forex trader. It means if you are a retail trader you can not work as a forex trader.
What Makes Copy Trading Illegal
In most countries copy trading is legal. But every country has its own limitations. It becomes illegal when someone breaks the laws of his own country. Especially if you hire an illegal broker. A regulated broker that follows the local law can protect your investment.
A greedy and unlawful broker can lose your money because he prefers his own interest to your benefit.
One of the big disadvantages of copy trading is that a trader loses control over his own account because he has to follow blindly the broker.
Is Copy Trading Illegal In India
Copy trading is legal and allowed in India but under strict rules of RBI.
Copy trading is becoming popular in India due to the influx of new traders in stock and The Forex. India permits you to produce successful trades on some other strategies. But all this is managed only through an authorized platform. Popular platforms are Robsforex, eToro, AvaTrade, Instaforex, etc.
RBI does not authorize the OctaForex App and its website. So, For conduct and process of Copy trading through OctaForex App is Illegal in India
Is Copy Trading Halal
Copy trading is permitted in Islam if it abides by certain rules like interest-free trade and signals. In One Of eToro’s blog posts, they claim that copy trading through Etoro Is halal. For this, they give reasons and prove that their work is according to Islamic laws. Many brokers of well-known platforms offer you a halal account for this purpose. These accounts are swap-free and fee-free overnight.
Is Copy Trading Illegal UAE
With copy trading, you have to copy other traders buying and selling positions in the live market. In Abu-Dhabi ADGM ( Abu-Dhabi Global Marketing), financial regulatory authorities(FSRA) regulated the law and regulation for trading. Famous platforms like eToro, and Avatrde are giving the best performance here. Now a question about its legitimacy is whether copy trading is allowed in the UAE.
The answer is simple, yes, it is permitted in UAE and you need to authorize a personal fund manager who executes trades for you. ADGM and FSRA regulate these brokers.
Copy trading is a risky and often controversial activity that financial regulators and professional traders alike have roundly criticized. While some argue that copy trading can be a profitable strategy, evidence suggests that it is often a high-risk proposition that can lead to significant losses.
If you are considering copy trading to make money, it is important to be aware of the risks involved and understand the legal implications of this practice. By sharing this blog post, you can help educate others about the dangers of copy trading and help protect them from potential financial losses.