Copy Trading in Australia: Shortcut or Mirage?

Australians have always had a taste for speculation. From the gold rushes to the stock market booms of the 1980s and the crypto fever of recent years, the promise of fast gains has a magnetic pull. The latest chapter in this story is copy trading: a method that lets you piggyback on the trades of supposedly smarter, more experienced investors.

It sounds almost too good to be true. Choose a trader, click a button, and their every move—buy, sell, hold—unfolds in your account. No need to sit glued to a trading screen. No need to agonise over charts. Someone else does the hard thinking; you simply follow.

But like most shortcuts in finance, the reality is more complicated.

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Where did copy trading come from?

The idea didn’t begin in Australia. In fact, its origins lie in the foreign exchange markets of the mid-2000s. An Israeli firm, Tradency, launched the Mirror Trader platform in 2005, allowing users to replicate strategies from professional forex dealers. It was followed by ZuluTrade, which built a broker-agnostic network of “signal providers.” Then came eToro in 2010, turning copy trading into a kind of financial social network, complete with profiles, feeds, and a “CopyTrader” button.

What started as a tool for institutions quickly spilled into the retail market. The pitch was irresistible: democratise access to expert strategies, let the ordinary investor ride the coattails of those with better instincts and deeper experience.

How it works

Copy trading is straightforward in concept. You select a trader – or, in some cases, an algorithmic strategy – and allocate capital to mirror their decisions. If they go long on the S&P 500, so do you. If they dump gold, your account follows suit. Some platforms allow you to tweak allocations or set stop-losses, but the thrust of the model is automation.

It’s worth stressing what it is not. Copy trading is not a tip sheet, nor is it a casual recommendation over coffee. It is execution: trades happening in your account, in near real-time, tied directly to another person’s behaviour.

Is it legal here?

Yes, though it sits inside the existing financial regulatory framework rather than being defined as a distinct category. In Australia, copy trading is offered by firms holding an Australian Financial Services Licence (AFSL). That means they are bound by the Corporations Act, must produce Product Disclosure Statements, and – crucially – must comply with the Design and Distribution Obligations introduced in recent years.

The Australian landscape

Several well-known brokers now offer copy trading locally. Pepperstone has partnered with DupliTrade. IC Markets runs its cTrader Copy service and a social app called IC Social. AvaTrade has its own ‘AvaSocial.’ FP Markets gives clients access to Myfxbook AutoTrade and other signal services. ThinkMarkets recently launched ThinkCopy, while eToro remains the most recognisable brand, thanks to its global marketing machine.

The menu of instruments is wide: forex, indices, commodities, cryptocurrencies, and, in some cases, equities and ETFs. For the most part, though, copy trading in Australia is still tied to contracts-for-difference (CFDs) – instruments that allow leverage but come with their own risk.

Provider	What your copy	Typical Markets
eToro	Individual traders (“Popular Investors”)	Stocks, ETFs, crypto, indices/commodities via CFDs
Pepperstone	Strategy providers & traders (signals auto-replicated)	FX, indices, commodities, share-CFDs
IC Markets	Strategy providers & traders on cTrader	FX & CFD markets (indices, commodities, crypto-CFDs)
FP Markets	Traders’ verified systems (AutoTrade) & signal providers	Primarily FX & CFDs
AvaTrade	Individual traders within AvaTrade social app	FX, stocks, crypto, more

Who are you copying?

The answer varies. Sometimes it’s an identifiable trader – a “Popular Investor” on eToro or a signal provider on MetaTrader. Other times it’s an algorithmic strategy running behind the scenes. Transparency can be patchy. Some platforms provide detailed histories, risk scores, and drawdown charts. Others offer little more than recent performance snapshots.

And therein lies one of the core issues: just how much faith can you place in the stranger you’re tethering your money to? A glowing 12-month track record can mask wild swings or survivorship bias.

The promise and the peril

Advocates point to several benefits. Copy trading can be educational, showing novices how experienced traders approach markets. It can reduce the emotional burden – fear and greed – that drives poor decision-making. It can also offer diversification, letting you allocate slices of your capital to multiple strategies or markets.

Yet the risks are equally stark. Retail investors in leveraged products often lose money, regardless of whether they’re trading themselves or copying others. Following a single trader concentrates risk: if they hit a losing streak, you wear it too. Worse, herding behaviour – where thousands of clients cluster into the same leader – can amplify volatility and systemic risk.

The legal questions

For regulators, copy trading blurs uncomfortable boundaries. Is it investment advice? Portfolio management? Or simply execution? The distinction matters because each carries different obligations under law.

Globally, regulators are grappling with the same questions. The International Organization of Securities Commissions (IOSCO) has called for principles-based rules, warning of risks ranging from market abuse to “finfluencing” on private social networks.

Do you have to watch the screen all day?

No – and that’s part of the appeal. Once you’ve chosen a trader or strategy, execution happens automatically. You don’t need to hover over a keyboard. Most platforms allow you to stop copying instantly, set maximum drawdown limits, or allocate only part of your capital. In theory, you can check performance weekly rather than hourly.

That said, “hands-off” doesn’t mean “risk-free.” Automation won’t protect you if the trader you’ve chosen suffers a catastrophic loss. The absence of daily decision-making can lull investors into a false sense of security.

Does it work?

The answer depends on what you mean by “work.” If the aim is to avoid the grind of studying charts and placing trades, then yes: copy trading delivers. If the aim is reliable profits, the picture is far murkier.

ASIC’s own warnings are blunt: copying does not change the fact that leverage investments amplify risk, and therefore losses. Some investors may enjoy good runs, particularly if they diversify across multiple strategies and keep allocations modest. Others will find themselves following a “star trader” who shines brightly before burning out.

Copy trading, then, is not a magic wand. It is an investment tool with potential benefits and very real dangers.

A final word

Australians don’t need reminding that financial markets reward caution as much as courage. Copy trading has an alluring simplicity: a click to connect your fortune to someone else’s. It democratises access to markets, flattens the learning curve, and offers a veneer of professionalism to those who might otherwise be trading blind.

But shortcuts are rarely as smooth as advertised. The legal framework in Australia ensures that copy trading is regulated, but not foolproof. The risks remain, and they fall squarely on the shoulders of the retail investor.

The wisest approach? Treat copy trading as one tool among many, not as a guaranteed pathway to riches. Do your homework, question the track records, and start small. Because in the end, no matter how closely you follow another trader, it’s still your capital on the line.