What Is Copy Trading and How Does It Work?

Copy trading (sometimes called trade copying or mirror trading) is a way to automatically replicate the trades of another trader in your own brokerage account. Instead of watching the markets and entering every order yourself, you choose a trader or strategy to follow, and their trades are routed to your account automatically, each one sized according to the rules you set.

The key distinction from a managed account is control: in copy trading you keep your capital in your own brokerage account and you decide the position sizing, the risk limits, and whether automation is on at all. The platform provides the automation and safeguards; it does not take custody of your money or trade with discretion on your behalf.

How copy trading works, step by step

• Connect your own brokerage account (RelayTrades connects through SnapTrade, so your login credentials are never shared with us).
• Choose a strategy or trader to follow and subscribe to their signals.
• Set your sizing and safeguards, how big each copied position can be, your maximum exposure, daily-loss caps, and slippage protection.
• When the trader places a trade, a signal is generated and the matching order is routed to your connected account, scaled to your settings.
• You can switch any strategy to manual approval, pause automation, or hit a kill switch that halts everything and flattens open positions instantly.

Copy trading vs. signals vs. managed accounts

These three terms are often confused. Trade signals simply notify you of a trade so you can act on it yourself. Copy trading automates that step, the trade is routed to your account for you, within your limits. A managed account (such as a PAMM or MAM arrangement) is different again: there, a manager has discretionary authority over pooled or delegated funds. RelayTrades is in the copy-trading / signal-automation category, it is not a money manager and never takes discretion over your account.

What sizing and risk controls actually do

A common worry is that copying a trader with a large account could blow up a small one. Good copy-trading software solves this with proportional sizing and hard limits. Before any copied order is placed, RelayTrades enforces your rules server-side: maximum position size, total exposure, concurrent-position count, daily-loss caps, and slippage protection. If a copied trade would breach a limit, it is capped or skipped rather than blindly mirrored.

You keep control: every copied trade respects your server-side limits, you can route any strategy manually instead of automatically, and a one-tap kill switch stops everything at once.

Is copy trading right for you?

Copy trading can save time and let you follow strategies you find compelling without watching the screen all day. It is not a guarantee of profit. All trading involves risk, the trader you follow can lose money, and past performance is historical and not indicative of future results. Treat it as a tool to automate a strategy you understand and have chosen deliberately, with your own risk limits firmly in place.