Copy Trading in Africa is Booming: Is it a Passing Phase or True Adoption?

The concept of copying trades from experienced traders has been around for a while. However, the latest data suggests that the trading technique is now witnessing massive adoption in Africa.

Popular investment platform eToro was among the first companies to start supporting copy trading. After the trading strategy proved beneficial to novice traders, several forex brokers adopted it.

Meanwhile, data from TradingBrowser.com indicates that the number of searches from Nigerians for the phrase “copy trading” on popular search engine Google has exceeded those from Americans by more than 1,900% over the last four years. South Africa and Kenya take the second and third positions, respectively, based on the number of Google searches for copy trading.

While Africans are showing massive interest in copy trading, the big question is whether the curiosity about this trading technique will lead to adoption or is just another passing phase.

Is Revolution Brewing?

Insight Partners’ recent report shows the copy trading sector has grown from $2.1 billion in 2021 to $3.1 billion in July 2023. The research company expects this market to hit $4.6 billion by the end of 2028.

Additionally, the report notes that traders in North America account for over 50% of the trading volume.

When Did Copy Trading Start Gaining Popularity in Africa?

According to INGOT Brokers’ Regional Director for Africa, Paul Hwingwiri, copy trading in the continent started becoming popular in 2020 during the COVID-19 pandemic. Many people were forced to stay home at the time, so they began exploring the online trading world. Since most of them had zero knowledge about trading, they preffered to copy the trades of seasoned traders and then split profits.

Hwingwiri, who was working at Axi brokerage firm in 2020, said the platform’s copy trading feature saw its usage grow by 300% within a year.

Conversely, Squared Financial’s Director of its Nigerian branch, Temitope Ijibadejo, says the popularity of copy trading is fueled by financial brokers that have been advertising the feature more aggressively in recent years compared to when it was introduced in 2008.

Ijibadeyo says that since the start of this year, Squared Financial has received several requests from Nigerians to consider supporting copy trading.

Meanwhile, Exness’ Director for Sub-Saharan Africa, Paul Margarites, says the brokerage company is not considering introducing copy trading, arguing that the space is already flooded by other industry players.

Is Copy Trading Profitable?

Nigerian forex trader Boyo Abidemi says copy trading is only profitable for people with huge capital. For this reason, he claims that most Nigerians have not made profits from copy trading because they don’t have enough money to invest in forex.

Challenges Likely to Slow Down Copy Trading Adoption in the African Continent

One of the top challenges that could hinder the adoption of copy trading in Africa is beginner traders’ lack of knowledge. Most of them do not understand the factors to consider when choosing the right copy trader. They just check the trader’s return on investment, and that is enough for them to copy their trades. Ijibadejo reveals that the performance statistics of copy traders displayed on their profiles can be fictitious and deceiving.

He also points out the get-rich-quick mentality that some brokers are trying to sell to beginner traders by promoting copy trading as an easy way to make money from forex. Ijibadeyo says these brokers should instead provide educational materials so the novice traders understand what they are getting themselves into.