What Is Copy Trading in Kenya and How Does it Work?

One thing that most new or aspiring Forex traders agree on is that it there is an incredibly steep learning curve. This usually puts off a lot of people who don’t want to take time and learn complex trading strategies.

The good news is, there is a simple workaround around this hurdle. It is called copy trading.

In this article, I will take you through the concept of copy trading. That is, how it works, how to get started , the benefits and some of the risks you should look out for.

Let’s dive in.

READ: Complete Guide to Forex Trading in Kenya

What is Copy Trading?

Copy trading, also known as social trading, is a practice where traders replicate the trading strategies and positions of skilled and experienced traders. By doing so, you can mimic the actions of successful traders, potentially profiting from their expertise without requiring an in-depth understanding of the Forex market.

Imagine a scenario where you can shadow the trading moves of seasoned investors, mimicking their successes and learning from their failures – that’s copy trading in a nutshell. The concept is straightforward: find an accomplished trader, copy their trades, and potentially reap the rewards. 

The catch? If their trades go well, you profit; if not, you bear the losses alongside them.

A golden rule: always keep tabs on the performance of your chosen traders to ensure you’re on the right track.

How Does Copy Trading Work?

Copy trading is like having a backstage pass to the world of professional trading, where you can follow in the footsteps of seasoned traders without breaking a sweat. Let’s dive into the mechanics of copy trading and unveil the magic that makes it tick.

This form of trading is built on a brilliantly simple concept: you’re not alone in the trading arena. Instead, you’re linked to an experienced trader who navigates the market with finesse. As they make trades, you mimic their moves automatically. If they profit, you do too; if they hit a rough patch, you’ll feel the ripples.

That said, there are three parties involved in copy trading:

• The Provider (The Star of the Show): This is the trader whose expertise you’re tapping into. Their strategies and trades become your guiding light.
• The Copier (You, the Eager Learner): As the copier, you choose a provider to shadow. Your trading account mirrors their every move, amplifying your potential gains.
• The Broker (Behind-the-Scenes Coordinator): The broker is your bridge to the dance floor. They provide the platform that connects you to your chosen provider’s actions.

READ: Is Forex Trading Legal in Kenya? [What You Need to Know]

Copy Trading in Kenya – Market Overview

According to reports, Kenya is one of the biggest adopter of copy trading in Africa. In fact, copy trading is practiced more in Africa than some of the developed countries.

For instance, there has been a 300% increase in copy trading in Africa in the last 24 months alone, according to trading platform Axi. The practice is common in Kenya, Nigeria and South Africa.

In a recent study by TradingBrowser.com, data spanning from January 2004 to April 2023 (a span of 19 years) reveals a striking trend: Google searches for the term “copy trading” originating from Nigeria outpaced those from the United States by an impressive 1900%. This phenomenon is not exclusive to Nigeria; similar patterns emerged in other African nations.

Notably, searches from South Africa, the second-highest in Africa, surged ahead of the US by 800%. Kenyan search activity also stood out, surpassing searches from the UK and Australia by 1.8 times and 1.5 times, respectively.

Another report by Insight Partners ¹ reveals that the market size of the global social/copy trading industry was $2.2 billion at the end of 2021. The market is estimated to grow at a compounded annual growth rate of 7.8% to reach $3.8 billion by 2028. ²

How to Get Started With Copy Trading in Kenya

Benefits of Copy Trading

Copy trading isn’t just a trend; it’s a game-changer that brings a host of advantages to traders of all levels. Here’s a quick rundown of the perks you can enjoy:

• Diversity in Your Arsenal: Copy trading lets you follow multiple traders, diversifying your portfolio across different strategies, markets, and assets.

• Tap into Expertise: No need to be a trading wizard – copy successful traders’ moves and leverage their experience.

• Time-Efficiency: For busy bees, copy trading is a boon. Let the experts work their magic while you focus on other aspects of life.
• Learning on the Go: Observe and analyze the strategies of seasoned traders to improve your own skills and understanding of the market.
• Minimized Stress: Say goodbye to sleepless nights. Let others handle the complexities while you enjoy a more relaxed trading experience.
• Risk Management: Spread your risk across various providers to mitigate the impact of potential losses.
• Beginner-Friendly: A perfect starting point for newcomers to the trading scene, offering a gentle learning curve.
• Customizable Control: Adjust risk settings and tailor your copy trading strategy to match your risk appetite and goals.
• Transparency: No secrets here. Performance data of providers is laid out, helping you make informed decisions.
• Community Interaction: Connect with fellow traders, learn from their insights, and share your own experiences.
• Potential for Profit: A successful provider could lead you to profits without the intense effort of traditional trading.
• Independent Journey: Use copy trading as a stepping stone to develop your unique trading strategies and transition to manual trading.
• Consistency: Providers follow their strategies systematically, reducing emotional biases that might affect individual traders.
• Real-Time Reflection: As your account mirrors the provider’s trades in real time, you’re always in sync with the market.

Copy trading is like having an experienced mentor guiding you through the trading maze. It’s a powerful tool that democratizes the world of trading, giving everyone a chance to dance with the pros.

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Risks of Copy Trading in Kenya

While copy trading offers a world of opportunities for novice traders, it’s not without its share of challenges. Here are the potential risks you should be aware of when engaging in copy trading in Kenya :

• Losses Mirror Provider: When your provider faces losses, your account mirrors those losses as well.
• Overreliance: Relying solely on copy trading without understanding the market can hinder your learning and growing as a trader.
• Market Volatility: Sudden market fluctuations can lead to unexpected losses, affecting both you and your provider.
• Diversification Dilemma: Over-reliance on a single provider can expose your portfolio to their unique risks and strategies.
• Provider Reliability: If your provider’s strategy changes or they stop trading, your account could suffer.
• Hidden Fees: Some platforms and providers may charge additional fees, impacting your overall profits.
• Emotionless Trading: Copying trades may lead to emotional detachment, preventing you from actively managing risk.
• Limited Control: You can’t control individual trade actions, potentially leading to losses during fast-moving markets.

Best Platforms for Copy Trading in Kenya

1. FXTM
2. AvaTrade
3. LiteFinance
4. Axi
5. HF Markets
6. Exness
7. OctaFx

The Bottom Line 

Copy trading has democratized access to the Forex market, offering a bridge for traders of all levels to tap into the expertise of successful traders. By understanding the basics, choosing the right platform, and building a solid copy trading strategy, you can embark on a journey of continuous learning and potential profit. Remember, while copy trading can accelerate your progress, make sure to continuously learn in order to understand the market better.

1. The Insight Partners, Social Trading Platform Market Share & Size Analysis by 2028
2. Finance Magnets, Is Copy Trading Still Popular in 2022?