Copy Trading: What's Actually Regulated

How Copy Trading Works

Copy trading lets you automatically replicate trades placed by another person. You link your account to theirs through a platform. When they open a position, the same trade executes in your account at the same time, usually scaled to your account size.

The flow looks like this: trader A opens a trade → platform detects it → your account receives an identical instruction → trade opens in your name.

You remain the owner of your account and the trades. The platform simply mirrors instructions.

Which Parts Need a Licence

The platform operator — the company hosting the copy trading service — must hold a licence. This licence covers:

• Holding client money
• Executing trades on your behalf
• Keeping records of your account activity
• Maintaining systems that track positions and payouts

The licence does not cover the person whose trades you're copying. That trader is simply using the platform like any other client. They are not providing a regulated service to you. They receive no authorisation to manage your money or give trading instructions to others.

Why the Source Trader Is Unregulated

The trader you copy makes trades for their own account only. The platform automation means you follow those trades, but the trader themselves has no obligation to you. They don't charge you a fee (usually), don't manage your account, and don't hold your money.

If they did any of those things, they would need a licence. But because the relationship is purely mechanical — you've chosen to mirror their actions — regulation doesn't apply to them as an individual.

What You Should Verify

Before using a copy trading platform, check that the platform operator holds a valid licence. Most regulators maintain public registers where you can confirm this. Search the operator's name on the regulator's own website.

Verify the licence covers:

• Your country of residence
• The services offered (trading execution, account holding)

Do not assume the trader you copy is regulated. Assume they are not. Their past performance is not a reason to trust them or to expect future results.