Is Copy Trading Legal in India?: All You Need to Know
Copy trading has become increasingly popular in recent years. Almost all the leading brokerage firms are now offering this innovative service. But can you participate in copy trading while in India? Is it even legal? We have answers to these questions in this article. Read on to learn more.
What’s Copy Trading?
When one trader uses strategies of another trader to make their trades profitable, that act is known as copy trading, which can be automatic or manual. Copy trading is popular among novice traders who lack the right skill set to open winning trades in the financial markets.
Most copy trading platforms have several helpful features, including:
- Options to copy multiple experienced traders
- Analytical data of the lead traders
- Stop loss and take profit functionalities.
Is it Legal to Copy Trades in India?
Yes! The Indian government recognizes copy trading as an investment strategy. So, traders are allowed to replicate trades on both foreign and local copy trading platforms without any restrictions.
To ensure your copy trading funds are well protected, it is vital to sign up with a platform that adheres to stipulated regulations. Like other countries, India has seen massive growth in the number of copy traders over the past few years.
How to Select a Trusted Copy Trading App in India
Reliability: Ensure the platform you pick to copy trades is trustworthy and reputable. To confirm the platform’s reliability, check online customer reviews. Avoid a platform with many negative reviews.
Regulation: Regulated copy trading platforms are better than non-regulated ones. Therefore, copy trading on a regulated platform reduces the chances of being scammed. Ensure the platform is licensed by SEBI or another reputable regulator from a foreign country.
Copy trading network: A proper copy trading platform usually hosts multiple lead traders to give copy traders a vast range of options.
Risk management tools: While copy trading can be profitable, it does come with its share of risks. Therefore, you need a platform with risk management tools to help you minimize your trading risks.
Technology: The technology applied on a particular platform determines your copy trading experience. You will likely have a poor experience if you copy trades on a platform lacking basic features like stop loss and take profit. That said, check a platform’s copy trading features to gauge if they meet your needs before signing up.
Recommended Copy Trading Apps in India
There are several globally recognized brokerage firms that operate in India, allowing traders in that country to engage in copy trading. Some of them include:
eToro
This broker is regulated by financial regulators in Cyprus, the United States, and Australia. It has one of the biggest social trading networks in the world. Furthermore, eToro comes with a reliable, user-friendly copy trading platform that allows Indian traders to replicate the strategies of proficient traders easily.
To start copy trading on eToro, you need to deposit at least $10. There are over 1,800 financial instruments available for Indians to copy trade.
RoboForex
This broker has obtained a license from an Indian regulator. Its simple user interface makes it ideal for beginners. With as low as $5, Indian traders can replicate trades in eight financial markets on RoboForex.
AvaTrade
As a highly regulated brokerage firm, AvaTrade offers a safe way of copying trades. The broker has licenses from seven top-tier global regulators. As an AvaTrade user in India, you must sign up with either ZuluTrade or MQL5 to start copying trades because the broker lacks its own copy trading platform. Nonetheless, you will be able to monitor copied trades from your AvaTrade account.
How to start Copying Trades in India
Step 1: Select a reliable brokerage firm offering a copy trading service and then create an account.
Step 2: Fund your trading account with the required amount.
Step 3: Pick a lead trader using the provided analytical data and copy their strategy.
Step 4: Withdraw profits.