Best copy trading platforms

What is copy trading?

Copy trading is an investment method that allows traders, whether beginners or experienced, to automatically replicate the strategies of other more seasoned investors. This approach is particularly popular in CFD (contracts for difference), cryptocurrency, Forex, and stock trading.

How copy trading works

The principle of copy trading is simple: an investor (called a "copier") selects an experienced trader (called a "strategy provider") and configures their account to automatically replicate their positions. When a copied trader opens or closes a position, this action is replicated in real time on the copier's account, in proportion to the capital invested.

Why Choose Copy Trading?

Copy trading offers several advantages, including:

• Accessibility: It allows beginners to invest in the financial markets without needing advanced trading knowledge.
• Time-saving: Investors don’t need to analyse the markets themselves or make complex decisions.
• Diversification: It is possible to copy several traders and thus spread the risks.
• Progressive learning: By following the strategies of experienced traders, investors can understand the mechanisms of the market and refine their own trading strategy.

What is a copy trading platform?

A copy trading platform is an online service that allows investors to automatically copy the strategies of more experienced traders. These platforms act as an intermediary between professional traders (or strategy providers) and investors wishing to replicate their operations.

They offer risk management tools, performance tracking features and customisation options to adapt the copy trading strategy to one's own financial goals.

Copy trading platforms work by connecting users' accounts to those of the traders they want to follow. Here are the main steps:

• Registration on the platform: the user creates an account and deposits funds.
• Selection of a trader to copy: the user can filter traders based on their performance, risk level, trading style, and other criteria.
• Configuration of parameters: the user chooses the amount they wish to invest and adjusts parameters such as the risk level or leverage.
• Automation of transactions: once copy trading is activated, the selected trader's positions are automatically replicated in the investor's account.

Copy trading and social trading: what are the differences?

Copy trading and social trading are often confused, but they have significant differences. Both allow investors to draw inspiration from the strategies of other traders, but their approach and operation vary.

• Copy trading is an automated process where an investor directly copies the trades of an experienced trader. Once the strategy is chosen, orders are replicated without manual intervention.
• Social trading, on the other hand, relies more on the exchange of information and individual decision-making. Traders share their analyses, strategies and performance, but each investor manually chooses the trades they wish to execute.

What social trading solutions are offered by brokers in South Africa?

In South Africa, several brokers offer social trading and copy trading solutions, allowing investors to follow and copy the strategies of experienced traders. These solutions are often integrated directly into trading platforms or accessible via specialized software. Here's an overview of the most popular software and the brokers that offer them.

How to choose a copy trading platform?

Choosing a copy trading platform is an essential step to maximise your chances of success while limiting risks. Several criteria must be taken into account to select the platform best suited to your needs and your investor profile.

1. Regulation and Security

When selecting a copy trading platform in South Africa, it's crucial to ensure that the platform is regulated by the Financial Sector Conduct Authority (FSCA). The FSCA mandates that platforms offering copy trading services must possess a Category II Financial Services Provider (FSP) license, as copy trading is considered a discretionary financial service.

Opting for an FSCA-regulated platform ensures that your funds are managed under stringent compliance standards. Such platforms are required to maintain segregated accounts for client funds, offer transparent reporting, and adhere to strict operational protocols. This regulatory oversight provides an added layer of protection for investors, safeguarding against potential malpractices and ensuring that the platform operates with integrity.

2. Available Traders to Copy

The diversity and quality of the traders offered are key elements. It is advisable to choose a platform that offers filtering tools to analyze the performance of traders:

• Historical performance
• Risk level
• Trading strategy (short term, long term, scalping, etc.)
• Maximum drawdown

Some platforms also offer performance scores to make it easier for traders to choose who to copy.

3. Accessible assets and markets

South African traders benefit from platforms that offer a diverse range of financial instruments, allowing for effective portfolio diversification. Key asset classes to consider include:

• Forex: Major currency pairs such as EUR/USD, GBP/USD, and USD/JPY are popular among South African traders. Additionally, the USD/ZAR pair is significant due to its relevance to the local economy .
• Stocks: Access to both local and international equities is essential. On the Johannesburg Stock Exchange (JSE), prominent companies like Naspers, Sasol, and Anglo American are frequently traded. Internationally, stocks such as Apple, Amazon, and Tesla are popular choices .
• Commodities: Given South Africa's rich mineral resources, commodities like gold and platinum are of particular interest. Trading platforms often provide access to these, along with other commodities like oil and silver .
• Indices: Indices such as the FTSE/JSE Top 40, S&P 500, and FTSE 100 offer exposure to broader market movements and are commonly available on trading platforms
• Cryptocurrencies: Digital currencies like Bitcoin, Ethereum, and Ripple are gaining traction among South African traders. Many platforms now offer crypto trading, reflecting the growing interest in this asset class .

4. Fees and commissions

Copy trading platforms apply different fee structures, which can impact your profitability. Here are the main costs to analyse:

• Spread: difference between the buying and selling price of an asset
• Commission per trade: some brokers charge a percentage on each transaction
• Inactivity fees: fees may apply if you do not make transactions for a certain period
• Profit sharing: some platforms charge a percentage on the gains made through copy trading

5. Features and User Experience

A good copy trading platform should offer an intuitive interface and powerful tools to manage your investments effectively. Key features to look for include:

• Demo account: test the platform with a fictitious account before investing real money
• Risk management tools: stop-loss, take-profit, adjustment of invested capital
• Advanced charts and graphs: real-time analysis of the performance of copied traders
• Mobile application: access to investments on the go

6. Platform Reviews and Reputation

Consulting user reviews and ratings on specialized sites like Trustpilot or trading forums provides an overview of the advantages and disadvantages of each platform. Prioritize those with a good reputation in terms of:

• Reliability of transactions
• Responsive customer service
• Ease of withdrawing funds

7. Customer Service and Support

Good customer support can make all the difference when you have a technical problem or a question about how copy trading works. Check the following:

• Contact channels (live chat, email, phone)
• Availability (24/7, opening hours)
• Support language (English)

What Assets Can You Trade with Copy Trading?

Copy trading allows you to invest in a wide range of financial assets, depending on the markets offered by the chosen platform. Some assets are more suited to copy trading strategies due to their liquidity and volatility. Here is an overview of the main assets accessible via copy trading.

How to practice copy trading with an online broker?

Copy trading with an online broker is a simple process that allows investors to copy the strategies of experienced traders. Here are the main steps to get started and optimise your copy trading experience.

1. Choose a broker offering copy trading

Not all trading platforms allow copy trading. It is therefore essential to choose a broker that offers this functionality and is regulated by a recognised financial authority (FSCA, etc.). Some of the most popular platforms include eToro, ZuluTrade, MetaTrader 4/5 (with signals), DupliTrade and Myfxbook AutoTrade.

Criteria to check before choosing a broker:

• Regulation and security of funds
• Available assets (Forex, shares, cryptos, indices...)
• Fees and commissions applied
• Quality and number of traders to copy
• Risk management tools and platform ergonomics

2. Create an Account and Verify It

Once the broker has been selected, you must open a trading account by providing personal information and completing the KYC (Know Your Customer) verification, which consists of submitting:

• A valid form of identification
• Proof of address
• A payment method to deposit funds

Certain brokers allow access to a demo account, which is useful for testing the platform and its interface before investing real money.

3. Deposit funds into your trading account

After the account has been validated, the investor must fund their trading account. Brokers generally offer several deposit methods:

• Bank card (Visa, Mastercard, etc.)
• Bank transfer
• Electronic wallets (PayPal, Skrill, Neteller, etc.)
• Cryptocurrencies (on some platforms)

The minimum deposit amount varies depending on the platform (from ZAR 850 to several thousand ZAR depending on the broker and the chosen asset).

4. Select a trader to copy

Choosing the trader to copy is a key step for success in copy trading. The platforms provide various criteria to analyze traders:

• Past performance (return over several months/years)
• Risk level (the more risk a trader takes, the greater the variations in their capital)
• Strategy used (short term, swing trading, scalping...)
• Maximum drawdown (maximum loss recorded)
• Number of copiers and reputation

Certain platforms, like eToro, assign risk scores to traders, allowing for an assessment of the stability and reliability of their strategy.

5. Define the amount invested and adjust the parameters

Before copying a trader, the investor must decide on the amount they wish to allocate to this strategy. Several risk management options are available:

• Fixed amount to invest: choose a specific amount that will be used to copy the trader
• Automatic stop-loss: define a maximum loss not to be exceeded
• Adjustment of the copy level: some platforms allow you to copy trades in proportion to the capital of the trader being followed

6. Monitor and adjust your copy trading strategy

Copy trading is a passive method, but it is recommended to regularly monitor the performance of the copied traders and adapt your strategy if necessary.

Best practices for optimising your copy trading:

• Diversify by copying multiple traders to limit risks
• Regularly check performance and adjust investments if needed
• Do not panic in the face of market fluctuations and remain consistent with your strategy
• Get training in parallel to better understand how the market works

What are the fees of brokers offering copy trading?

Copy trading platforms apply different types of fees that can affect the profitability of investors. It is essential to understand these costs well before choosing a broker, as they vary depending on the platforms and the assets traded. Here is an overview of the main fees encountered in copy trading.

1. Spreads: an indirect cost on each transaction

The spread is the difference between the buying (bid) and selling (ask) price of an asset. It is an indirect cost that the broker automatically integrates into each transaction, which means that the investor must cover this cost before being profitable on a trade. The higher the spread, the higher the cost of trading.

Example of spread on copy trading

An investor copies a trader who opens a position on the EUR/USD with a spread of 1.5 pips. This means that at the moment the position is opened, they are immediately at a slight loss equivalent to these 1.5 pips. If the market does not evolve sufficiently in their favour, the transaction may not be very profitable.

2. Transaction Fees: A Percentage or a Fixed Amount

Some brokers, in addition to the spread, charge a fee on each transaction made. This commission can be a fixed amount per order executed or a percentage of the amount invested. Brokers who use this model often offer tighter spreads.

Example of copy trading commission

An investor copies a trader specialising in shares. A commission of 0.1% is levied on each purchase or sale of a share.

• If they invest ZAR16,000 on a share, they will pay ZAR16 in fees when opening the position.
• If they close this position later for ZAR19,200, they will pay a commission of ZAR19.20 again.

Thus, their total fees on this transaction will be ZAR35.20.

3. Management or performance fees: A portion of the profits returned to the broker

Some copy trading platforms charge a commission on the profits made from copied positions. This model is generally used by brokers who offer professional traders to copy and who apply a profit-sharing policy.

Example of management or performance fees

A broker applies a performance fee of 20% on the gains generated via copy trading.

• If an investor makes a profit of ZAR 5000 by copying a trader, they will have to pay ZAR 1000 to the broker (20% of ZAR 5000).
• They will therefore have ZAR 4000 net of fees.

This type of fee is often justified by the quality and expertise of the traders offered by the platform.

4. Inactivity fees: a cost for unused accounts

Brokers sometimes impose inactivity fees if a trading account remains inactive for an extended period (often 3 to 12 months). These fees are charged monthly as long as the user does not perform any operations.

Example of inactivity fee

A broker applies an inactivity fee of ZAR 180 per month after 6 months of no trading activity.

• An investor who hasn’t used their account for 8 months will have to pay ZAR 360 in cumulative fees.
• To avoid these fees, they can simply make a transaction before the deadline.

This type of fee is particularly important to monitor if you plan to use a platform occasionally.

5. Withdrawal fees: a cost to recover your winnings

Some brokers charge fees on withdrawals, especially when the investor uses a bank transfer. These fees may be fixed or proportional to the amount withdrawn.

Withdrawal Fee Example

An investor wishes to withdraw ZAR 9,500 from their trading account. The broker applies fixed fees of ZAR 95 on each withdrawal.

• In the end, the investor will receive ZAR 9,405 in their bank account.

These fees can be avoided or reduced by choosing platforms that offer free withdrawals or by using alternative payment methods such as electronic wallets (PayPal, Skrill, Neteller).

Is copy trading suitable for beginners?

Copy trading is often presented as an ideal solution for novice investors, as it allows you to automatically copy the strategies of experienced traders. However, while this method facilitates access to financial markets, it is not entirely without risk. Here is an overview of the advantages and limitations of copy trading for beginners.

The advantages of copy trading for beginners

• No expertise required: unlike traditional trading, which requires in-depth market analysis, copy trading allows beginners to invest without having to master technical concepts such as technical or fundamental analysis.
• A progressive learning curve: observing the strategies of experienced traders allows novices to understand market mechanisms and learn to better manage risk over time.
• Time saving: as copy trading is automated, it is not necessary to constantly monitor the markets. Orders are executed in real time, without manual intervention.
• Simplified diversification: platforms allow you to copy multiple traders at the same time, which offers a better distribution of risk and avoids betting everything on a single strategy.
• Access to different asset classes: by copying several specialized traders, it is possible to invest in various assets (Forex, stocks, cryptos, commodities, etc.) without requiring in-depth knowledge of each market.

The Limits and Risks for Beginners

• Dependence on the performance of copied traders: Copying a trader does not guarantee profits. Even experienced traders suffer losses, and it is possible to copy a strategy that proves ineffective in the long term.
• Lack of control over investment decisions: Unlike manual trading, copy trading leaves little room for personalization. The investor automatically follows the decisions of the copied trader, which can be frustrating in case of poor performance.
• Risk of amplified losses: Some traders use high leverage, which can lead to significant losses if the market moves unfavorably. It is crucial to carefully analyze the level of risk before copying a trader.
• Fees that can reduce profitability: Some brokers apply fees on copy trading (commissions, spread, performance fees, etc.), which can impact the profits of beginner investors.
• The absence of guaranteed results: Even by copying a successful trader, the financial markets remain unpredictable. Past gains never guarantee future performance.

What strategy with copy trading?

Copy trading allows you to adopt different strategies depending on your investor profile, risk appetite and financial objectives. Some approaches favour stability and security, while others aim for higher returns by accepting an increased level of risk.

How to become a trader to follow for social trading?

Becoming a trader to follow on a social trading platform requires much more than just financial performance. You must demonstrate a reliable strategy, good risk management, and transparency that inspires confidence in investors wishing to copy your transactions.

Firstly, it is essential to define a clear and reproducible trading strategy. Investors favour traders whose performance is stable and consistent over the long term. Whether it's scalping, swing trading or long-term investment, a well-defined approach applied with rigour helps to gain credibility. Good risk management is also crucial: limiting drawdown, avoiding excessive leverage and not exposing all of one's capital on a single position reassures potential copiers.

Transparency is another key element. The most followed traders on copy trading platforms regularly share their analyses, decisions, and results. Publishing updates, explaining positions, and being active in the community helps attract copiers and retain existing ones.

Finally, a regular presence and interaction with copiers strengthen investor confidence. Some brokers even offer financial incentives to traders with a large number of followers. The more the trader inspires confidence, the more likely they are to be copied and increase their income through copy trading.

What is the taxation on income from copy trading in South Africa?

In South Africa, profits derived from copy trading are subject to taxation under the South African Revenue Service (SARS). The specific tax treatment depends on the nature of the trading activity and the assets involved.

Income Tax vs. Capital Gains Tax

The classification of your copy trading profits—whether as income or capital gains—determines the applicable tax:

• Income Tax: If you engage in frequent trading or rely on copy trading as a primary income source, your profits are typically considered income. These are taxed at progressive rates ranging from 18% to 45%, depending on your total taxable income.
• Capital Gains Tax (CGT): For investors who trade less frequently, profits may be classified as capital gains. In this case, 40% of the gain is included in your taxable income, and the effective CGT rate can be up to 18%. An annual exclusion of R40,000 applies to capital gains.

Taxation of Cryptocurrency Gains

Profits from copy trading in cryptocurrencies are also taxable:

• Capital Gains: If you hold crypto assets as investments, gains upon disposal are subject to CGT under the same rules mentioned above.
• Income Tax: If you trade cryptocurrencies frequently or as part of a business, profits are taxed as income at your marginal tax rate.

It's important to note that crypto-to-crypto transactions are considered barter transactions and can trigger tax events.

Reporting and Compliance

South African tax residents are required to declare all income, including foreign-sourced income from copy trading, on their annual tax returns. This includes profits from forex, stocks, indices, and cryptocurrencies. If you've paid foreign taxes on these earnings, you may be eligible for a foreign tax credit to avoid double taxation.

For traders using foreign brokers, it's crucial to convert all earnings to South African Rands using the exchange rate on the date of receipt and report them accurately.

Provisional Tax Obligations

If you earn income not subject to Pay-As-You-Earn (PAYE) withholding, such as profits from copy trading, you may need to register as a provisional taxpayer. This involves making tax payments twice a year and submitting an annual tax return. 

Professional Traders and Business Entities

If you operate copy trading activities through a registered company or as a professional trader, different tax rules may apply:

• Companies: Corporate entities are subject to a flat tax rate of 27% on taxable income.
• Small Business Corporations (SBCs): Qualifying SBCs benefit from a tiered tax rate structure, potentially reducing the tax burden for smaller operations.

P. Laurore

Finance expert

Co-founder of HelloSafe and holder of a Master's degree in finance, Pauline has recognised expertise in personal finance, which she uses to help users better understand and optimise their financial choices. At HelloSafe, Pauline plays a key role in designing clear, educational content on savings, investments and personal finance. Passionate about financial education, Pauline strives, with every piece of content she oversees, to provide reliable, transparent and unbiased information for independent and informed financial management. To this end, she has tested over 100 trading platforms to help internet users make the right choices.