Copy Trading enables individuals in the financial markets to automatically copy positions opened and managed by another selected individuals.
Unlike mirror trading, a method that allows traders to copy specific strategies, copy trading links a portion of the copying trader's funds to the account of the copied investor.[1] Any trading action made thenceforth by the copied investor, such as opening a position, assigning Stop Loss and Take Profit orders, or closing a position, are also executed in the copying trader's account according to the proportion between the copied investor's account and the copying trader's allotted copy trading funds.
The copying trader usually retains the ability to disconnect copied trades and manage them themselves. They can also close the copy relationship altogether. Copied investors are often compensated by flat monthly subscription fees on the part of a trader seeking to copy their trades.
Copy trading has led to the development of a new type of investment portfolio, which some industry insiders call "People-Based Portfolios" or "Signal Portfolios" (borrowing the terminology of the popular MetaQuotes Signal Marketplace)[2]. People-based portfolios differ from traditional investment portfolios in that the investment funds are invested in other investors, rather than traditional market-based instruments.
A smart contract is a computer protocol intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract. Smart contracts allow the performance of credible transactions without third parties. These transactions are trackable and irreversible.
Proponents of smart contracts claim that many kinds of contractual clauses may be made partially or fully self-executing, self-enforcing, or both. The aim of smart contracts is to provide security that is superior to traditional contract law and to reduce other transaction costs associated with contracting. Various cryptocurrencies have implemented types of smart contracts.