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by BAZOOM

COPY trading is a useful technique for individual investors and institutional traders to simplify their investing processes. 

With copy trading, investors can take advantage of the knowledge of market experts by copying their trades and they do not have to be involved in the decision-making process. This form of trading is useful for investors, both novice and experienced, in highly volatile markets such as forex and cryptocurrencies.

As the financial landscape gets more intricate, the need for effective trading techniques is fueling the growth of copy trading as a viable solution for diversification and portfolio risk in investments.

Copy Trading Functionality

Copy trading is simply connecting a trader’s account to a copy trader’s account. With copy trading, once the pro trader executes a trade, all the investors who have connected to that pro account automatically execute the same trade. This helps to effortlessly integrate the strategies of professionals with very little work from the follower.

Investors can conveniently use the copy trading feature on platforms like MetaTrader 4 and MetaTrader 5 to select a trader based on their trading style, risk appetite and historical performance data. These platforms provide an intuitive user interface that can be navigated easily by both beginners and advanced traders.

Advantages of Copy Trading for Investors in Malaysia

For investors based in Malaysia, copy trading offers distinct benefits that cater to the increasing demand for diversification in their portfolio and the need for escalating financial sophistication.

Easier Access to Professional Market Knowledge

Copy trading enhances accessibility to the financial markets, especially for those who do not have the time or expertise to participate in active trading. It enables users to take advantage of complex market strategies without investing countless hours in research or analysis, simply by relying on the insights of expert traders.

Self-Improvement and Professional Development

Copy trading enables those who are keen to learn trading to follow seasoned professionals in the industry. Through copy trading, Malaysian investors can learn market analysis, risk assessment, strategising and many other skills, thus developing a comprehensive understanding of financial markets.

Portfolio Diversification

Having a diverse investment portfolio is an essential aspect of risk management. Investors in copy trading can manage their portfolios by copying multiple traders who operate on different markets or asset classes. This form of investment helps manage risk. Risk in one asset or a strategy can no longer be a concern because another one will be profitable.

Time Efficiency and Convenience

Active traders require constant adjustments, which in turn translates to a lot of time. This is mitigated by copy trading courtesy of automation through mirroring expert trades. Investors are free to utilise their time as they wish, as they reap the benefits offered by the experts.

Popular Copy Trading Strategies

Every type of investor has unique needs. Thus, there are copy trading strategies that serve different kinds of investors.

• Full Copy Trading

In full copy trading, investors replicate every trade made by the trader they are following. This means the investor has embraced the trader’s policies and strategies and has, therefore, surrendered control of his or her investment.

• Selective Copy Trading

Selective copy trading enables investors to operate with a bit more control, as they are able to choose specific trades to be copied instead of a full portfolio. This means that traders can align their own investment aims with the risk profile.

• Automated strategies for copy trading

Some platforms provide features like copy trading, which automatically targets market trends as they happen. This is done in real time, which factors in the market’s current condition for better optimisation during trade execution.

Important Considerations in Copy Trading

Even though copy trading has numerous benefits for the user, a few factors should be given thoughtful consideration to avoid expensive mistakes.

Evaluating risks and market movements

When engaging in trading, market conditions should always be top of mind and the volatility of market movements is important. Even though copy trading is done on your behalf, there is always a chance your account will be at risk. The trader being copied could execute disastrous trades and all linked accounts would be impacted. It is important to have proper risk management strategies, like controlling exposures, broadening your portfolio and implementing loss limits.

Choosing the Right Trader

It is pivotal to set a trader whose specific metrics match your goals and account preferences. The platforms provide a wide range of metrics to analyse, like historical data, risk class and even frequency of trades. This data could help investors make better decisions.

Costs and Fees 

Even though copy trading can be an effective trading method, investors need to be aware of the costs involved. Some platforms charge a percentage of profits or a flat fee; thus, knowing the fee structure is crucial in deciding whether the strategy will benefit the investor.

Regulatory Considerations 

Given how financial regulations can change from one region to the other, it is imperative to check if the copy trading platform is adequately licensed within your region. Compliance ensures that the platform follows appropriate rules and benchmarks in the areas of safety and compliance, thereby adding some confidence to the investors.

Choosing the Best Platform for Copy Trading 

To effectively copy trade, Malaysian investors need to pay attention to the reputation of the trading platform and its reliability in offering secure and efficient copy trading services. Consider those that offer comprehensive trading resources, a wide range of traders to follow and responsive support. 

Also, those that offer demo accounts make it easier for novice traders to refine their strategies.

Safety and Trust While Using Copy Trading

In this era of ever-increasing digital threats, copy trading services and platforms must be vigilant and proactive when it comes to safeguarding user information and finances. It is equally important for copy trading platforms to have sufficient cybersecurity measures, such as data encryption and licensing, for the users who trust their platforms.

Risk Control When Copy Trading

Even though copy trading is a more automated form of trading, users must still implement basic levels of risk management. Key practices include:

• Position Sizing: Maintain a capped maximum size for each investment to minimize losses.

• Stop-Loss Orders: Manage risk by closing trades that go south at a set loss for that trade.

• Portfolio Diversification: Avoid putting all your trust in a single strategy. Spreading investments prevents heavy losses.

The Increasing Importance of Copy Trading in the Financial Markets

The copy trading phenomenon is taking hold in the investment circles of both institutional and retail traders as the financial world transforms. 

The rise of machine learning and AI is all but ensuring that copy trading will soon become ubiquitous as investment strategies evolve. 

Such technologies enhance the capability to analyze trading opportunities in the market and execute trades far more precisely, thus presenting an even higher return on investment.

The post Exploring the Role of Copy Trading in Modern Financial Markets appeared first on The Malaysian Reserve.

BURSA MALAYSIA opened higher today, mirroring Wall Street’s overnight rally after the latest US consumer price index figure came in slightly below expectations, thus paving the way for a possible Federal Reserve rate cut next month.  

The US recorded a softer inflation rate of 2.7 per cent in July, below consensus estimates for headline CPI at 2.8 per cent and core CPI at 3.0 per cent for July.

At 9.17 am, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 2.30 points, or 0.15 per cent, to 1,570.20 from yesterday’s close of 1,567.90.

The benchmark index had earlier opened 1.17 points firmer at 1,569.07.

Market breadth was positive, with advancers leading gainers 286 to 107. A total of 269 counters were unchanged, 1,860 untraded and 18 suspended.

Turnover stood at 298.39 million shares worth RM112.24 million.

Rakuten Trade Sdn Bhd vice-president of equity research Thong Pak Leng said overall trading remained lacklustre as traders were mostly sidelined ahead of more economic data and corporate earnings.

“Back home, the FBM KLCI closed firmer but off the day’s high, possibly due to profit-taking activities.

“Despite the 30 points gain over the past five days, we regard the local bourse’s valuation remains reasonable, hence expect more legs for the index towards the 1,600 level,” he told Bernama. 

For today, he expects the index to trend within the 1,565-1,580 range.

Among the heavyweights, Maybank added 2.0 sen to RM9.73, CIMB perked up 6.0 sen to RM7.07, Public Bank eased 1.0 sen to RM4.39, while Tenaga Nasional and IHH Healthcare were flat at RM13.58 and RM6.82 respectively.   

On the actively traded list, NexG was 1.0 sen better at 41 sen, Efficient E-Solutions gained 1.5 sen to 12.5 sen, Lotte Chemical Titan increased 2.5 sen to 56.5 sen, while Classita and TWL were flat at 9.5 sen and 2.5 sen respectively. 

On the broader market, the FBM Emas Index expanded 28.13 points to 11,703.63, the FBMT 100 Index widened by 26.42 points to 11,482.60, the FBM Emas Shariah Index climbed 21.64 points to 11,687.02, the FBM ACE Index picked up 3.07 points to 4,641.21 and the FBM Mid 70 Index jumped 80.44 points to 16,681.08.

By sector, the Financial Services Index appreciated 62.95 points to 17,877.60, the Plantation Index bagged 16.16 points to 7,547.97, the Industrial Products and Services Index inched up 0.17 of a point to 160.23, and the Energy Index strengthened by 1.18 points to 739.56. — BERNAMA 

The post Bursa Malaysia opens higher tracking Wall Street rally after softer US CPI appeared first on The Malaysian Reserve.

CHINESE stocks have gained ground in recent months despite a lack of major catalysts, with ample domestic liquidity likely to sustain the rally. 

Mainland households, flushed with record-high savings, are turning to equities for better returns as interest rates continue to drift lower. This shift in behavior has led to a surge in margin loans taken out to buy stocks, which climbed to the highest level since 2015 this week. The momentum is also seen in the monthly average turnover on onshore exchanges, which is on track for a third month of advances.

That’s pushed up the benchmark CSI 300 Index 15% from its April low, following months of range-bound trading. While Beijing hasn’t announced any major stimulus or finalized a trade deal with the US, markets have reacted positively to recent moves to curb excessive price wars and overcapacity in some sectors. These steps are seen by investors as a way to ease deflation and boost corporate earnings, which could provide further support to the market gains.

“Funds with a high risk appetite are gradually increasing their allocations to stocks, against the backdrop of low interest rates, a lack of good investment options and a surplus of liquidity,” said Fu Zhifeng, chief investment officer at Shanghai Chengzhou Investment Management Co. “The trend has just started building momentum and I don’t see any signals for it to reverse anytime soon.”

A gauge of onshore-listed small-cap stocks, long favored by individual investors, has surged to an eight-year high. The measure’s 14-day relative strength index has remained above the overbought level of 70 for six-straight sessions.

Cinda Securities Co. expects retail flows to accelerate in the second half of the year amid optimism over the government’s five-year development plan. That may be supported by higher money growth locally. Liquidity supply in China rose 4.6% in June from a year ago, the largest rise in more than two years, latest data showed. 

Ample liquidity could offset any potential outflows as some investors take profit after the recent rally. “There’s little room for a major correction,” said Zhou Nan, founder and investment director of Shenzhen Long Hui Fund Management Co. He expects some selling pressure as the Shanghai Composite Index approaches 3,700, a nearly four-year high. 

The gauge is about 0.2% away from the intraday high reached on Oct. 8 following a central bank policy blitz — a resistance level closely watched by local investors. 

Still, skeptics argue that the rally is unlikely to sustain without a meaningful recovery in earnings and economic prospects. The “divergent performance among sectors suggests there is no systematic improvement in the market yet,” said Shen Meng, director at Beijing-based investment bank Chanson & Co. 

That said, improving trade ties with the US is spurring some risk-on sentiment. Strategists at Citigroup Inc. and Goldman Sachs Group Inc. have raised views on the country’s stocks. Meanwhile, local insurance funds offer further support for equities. 

“This round of market rally, fueled by investor optimism, is far from over,” given that residents’ willingness to invest in stocks has increased, China International Capital Corp. analysts including Li Qiusuo wrote in a Monday note. –BLOOMBERG

The post China’s US$11t stock market is staging a quiet resurgence appeared first on The Malaysian Reserve.