Copy Trading & PAMM: A Beginner's Guide
Copy trading lets you mirror experienced traders with a click. The convenience is real — so is the diligence still required.
How it works
Copy trading (eToro, ZuluTrade, broker platforms) mirrors a trader's positions proportionally to your capital. PAMM (Percentage Allocation Management Module) pools investor money into a manager's account, splitting results by share. Both remove the need to trade yourself.
The due diligence that still applies
Past return is not future return. Check the trader's track record length, max drawdown, risk score and consistency across market conditions — not just the headline gain. A 300% year achieved with 90% drawdown is not 'safe'.
Costs and control
You may pay a spread mark-up, a subscription, or a performance fee on profits. You keep control of position size and can stop copying anytime. Start small and diversify across a few signal providers rather than one.
Related glossary terms
New to the jargon here? These plain-English definitions will help.
