Copy trading has become very popular among Australians who want to get involved in forex trading online without spending years learning complex strategies. By copying the trades of experienced investors, you can potentially earn profits while learning how the market works.
But while copy trading sounds simple, there are many pitfalls that can catch beginners off guard. If you want to avoid costly mistakes, here are some important things to avoid as a copy trader in Australia.
1. Blindly Copying Without Research
One of the biggest mistakes is choosing a trader to copy just because they have high returns. Some traders take huge risks that may not suit your goals or risk tolerance.
Avoid this by:
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Researching a trader’s history over at least 6–12 months.
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Checking how consistent their profits are.
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Looking at their maximum drawdown (the biggest loss they’ve experienced).
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Reading their trading strategy description.
Remember, past performance doesn’t guarantee future results. A trader who had a lucky streak may not stay profitable long-term.
2. Ignoring Risk Management
Many beginners assume that copying an experienced trader means they don’t have to think about risk. However, forex trading online always involves potential losses. Even professionals make mistakes.
Avoid this by:
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Setting your own stop-loss limits.
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Never allocate all your funds to a single trader.
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Diversifying across multiple strategies and traders.
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Only invest money you can afford to lose.
Good risk management is essential to surviving bad market periods.
3. Chasing High Leverage
Leverage allows you to control a large trade size with a small amount of money. While it can multiply profits, it also multiplies losses. Some traders use very high leverage to boost their results, which may look impressive but is extremely risky.
Avoid this by:
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Choosing traders who use moderate leverage.
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Understanding exactly how leverage affects your account.
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Avoid any platforms or strategies that encourage excessive risk-taking.
In Australia, reputable brokers must comply with ASIC regulations that limit leverage to protect retail traders—stick with regulated providers to stay safe.
4. Not Understanding Fees
Copy trading platforms often charge fees, including:
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Performance fees (a share of profits).
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Spreads (the difference between buy and sell prices).
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Overnight financing costs.
If you ignore these, you might be surprised when your account balance doesn’t grow as quickly as you expect.
Avoid this by:
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Read the fee structure carefully before you start.
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Comparing platforms to see which offers the best value.
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Factoring costs into your trading plan.
Lower fees can make a big difference to your long-term results.
5. Copying Too Many Traders at Once
While diversification is good, copying too many traders can lead to confusion and conflicting trades. Your account could end up overexposed to the same currencies without you realising it.
Avoid this by:
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Starting with 1–3 carefully selected traders.
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Monitoring how their trades combine in your portfolio.
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Gradually adding more traders only after you’re comfortable managing the mix.
Think of it like building a team—quality matters more than quantity.
6. Failing to Monitor Performance Regularly
Some beginners set up copy trading and then forget about it. Even top traders can hit losing streaks or change their strategies. If you aren’t watching, you could end up with unexpected losses.
Avoid this by:
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Checking your account at least weekly.
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Reviewing each trader’s recent performance.
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Pausing or stopping copying if a trader no longer fits your goals.
Copy trading isn’t 100% hands-off—you still need to stay engaged.
7. Letting Emotions Take Over
When trades go well, it’s tempting to increase your risk. When trades go badly, it’s tempting to pull out too quickly. Emotional decisions are one of the main reasons beginners lose money.
Avoid this by:
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Setting clear rules about when to stop copying or adjust your exposure.
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Not making changes impulsively after a bad week.
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Focusing on long-term performance instead of short-term swings.
Trading requires discipline—stick to your plan.
8. Choosing Unregulated Platforms
The popularity of forex trading online has led to an explosion of trading platforms. Unfortunately, not all of them are safe or legitimate. In Australia, you should always check if a broker or platform is regulated by the Australian Securities and Investments Commission (ASIC).
Avoid this by:
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Only using ASIC-regulated brokers.
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Checking the ASIC register to confirm licences.
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Avoiding offers that sound too good to be true, like guaranteed profits.
Regulation protects you against fraud and unfair practices.
Final Thoughts
Copy trading can be a great way to get started with forex trading online, especially if you don’t have the time or experience to trade on your own. But it’s not a shortcut to easy money. Like any investment, it requires care, research, and good risk management.
By avoiding these common mistakes, you give yourself the best chance to build your skills and grow your trading account safely. Always remember:
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Choose regulated platforms.
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Research traders carefully.
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Manage your risk.
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Stay engaged and informed.
With patience and discipline, copy trading can be a valuable part of your trading journey.
