What Is Copy Trading

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Here is a nice explanation about copy trading.

Copy trading enables traders in the financial markets to automatically copy positions opened and managed by a selected investor, usually in the context of a social trading network.

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 all together.

Copy trading has led to the development of a new type of investment portfolio, which some industry insiders call “people-based” portfolios. People-based portfolios differs from traditional investment portfolios in that the investment funds are invested in other investors, rather than traditional market-based instruments.

http://en.wikipedia.org/wiki/Copy_trading