I’ve been doing copy trading for a few months now and I’m starting to think about diversifying my portfolio. Right now I’m only copying one trader who focuses mainly on Forex pairs.
I was wondering if it would make sense to spread my investments across different markets by copying:
One trader who specializes in Forex (EUR/USD, GBP/USD, etc.)
One who trades Gold (XAU/USD)
One who focuses on stock indices like the S&P 500 or NASDAQ
My thinking is that this would reduce my risk since these markets don’t always move in the same direction. But I’m not sure if this is actually good diversification or if I’m just overcomplicating things.
Has anyone tried this approach? What are the pros and cons of copying traders across different asset classes versus sticking to one market? Also, is there anything I should watch out for when selecting traders from different markets?
Been running this setup for 2 years. I copy a forex scalper, gold swing trader, and someone trading US indices.
Diversification smooths out the equity curve. Forex gets choppy, gold moves independently. Indices follow their own rhythm with economic data and earnings.
Here’s what I learned the hard way - correlation spikes during major news. All three got hammered in last year’s banking crisis because everything moved together.
Watch trading hours too. Gold trader’s active during Asian session, forex guy trades London/NY overlap. Position sizing got tricky since signals came at different times.
One tip - check how each handles drawdowns. My first index trader kept doubling down during losing streaks. Killed my account even though the other two were profitable.
Start small with each trader until you see how they work together. Risk management gets more complex with multiple signal providers.
Diversifying across those three markets can work, but check if your traders actually correlate first.
I tried this and my forex and gold traders kept moving together during volatile periods. Different trading styles helped way more than different assets.
I’d focus on finding traders with different risk approaches and timing. A conservative swing trader plus an aggressive scalper will probably diversify you better than three traders using similar strategies across different markets.
Test each trader’s performance in different market conditions before you put real money down. Gold traders usually get wrecked during sideways markets. Index traders get demolished when earnings season hits. Your diversification is pointless if all the traders manage risk the same way. Three aggressive traders in different markets? That’s still just high risk with extra steps. Check each trader’s max drawdown history. A forex trader who’s lost 15% and a gold trader who’s dropped 20% can team up to lose way more than you think.