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More beginners are looking for simple ways to invest, and copy trading is becoming a popular way to start. Over the past six months, major platforms have seen a rise in new accounts, as users look for tools that make investing easier and more accessible.
The Financial Conduct Authority (FCA) is now watching the trend more closely. It has raised concerns about how copy trading works in the long term, and what risks it could pose to new investors.
As digital investing becomes more common, copy trading is no longer just a convenience. It’s starting to look like a serious way for the next generation to get involved in the markets.
In This Guide
How Copy Trading Works – and Why It Appeals to Beginners
Copy trading allows people to follow the trades of experienced investors automatically. When someone chooses a trader to copy, their account copies each trade, including any gains or losses. For beginners, this offers an easy way to start investing without needing to study the markets in detail.
Platforms like eToro are popular for copy trading in the UK. eToro stands out for attracting younger users by mixing trading tools with social media features. This makes the process feel more familiar and easier to use. Unlike traditional methods such as picking individual stocks or using a robo-adviser, copy trading allows users to skip research and mirror someone else’s strategy in real time.
But simple doesn’t mean safe. Some platforms don’t explain the risks clearly. And not every investor understands how copied trades work, or what can go wrong.
Rules, Risks and Tax You Should Know
UK platforms offering copy trading must be authorised by the Financial Conduct Authority (FCA). They’re required to explain how trades are carried out, what fees apply, and what risks are involved.
Even so, the FCA has raised concerns. In a recent update, it called copy trading a “developing area of consumer behaviour”, warning about the impact of social media and the blurred line between content and advice. Tighter rules may follow, especially around high-risk products like leverage or derivatives.
Tax is another issue. Most copy trading happens outside ISAs or pensions. With the Capital Gains Tax allowance now set at £3,000, many users may face tax bills, particularly if they trade frequently or follow volatile assets. This can catch beginners off guard, especially those unaware of how gains are taxed.
Mixed Outcomes for Investors
Some users have seen good returns, but results aren’t guaranteed. Most platforms show trader stats like past returns, losses, and risk scores, but these don’t predict the future. Even experienced traders can lose money, especially in fast-moving markets like crypto or forex.
Traders with lots of followers may feel pressure to keep performing well. This can lead them to take more risks just to stay ahead.
Investor behaviour adds to the challenge. Many beginners change who they follow often, especially after small losses. One survey found that most UK copy traders switched leaders three times in their first year.
Copy Trading and the Risk of Passive Decision-Making
Copy trading sits between active and passive investing. Users don’t choose individual assets, but they do select who to follow. That choice is often based on recent performance or follower count, rather than strategy.
Without insight into the reasoning behind trades, investors may lack the context needed to respond when markets turn. Some platforms provide educational tools, but these are underused.
Costs also matter. While most platforms are free to join, they may charge wider spreads or performance fees. Over time, these can reduce returns, particularly for shorter-term approaches.
The Influence of Social Media
Social media has played a big role in the growth of copy trading, especially among younger investors. Influencers on platforms like TikTok, Instagram, and YouTube often promote trading tips. They display past results and share referral codes, sometimes without clearly warning about the risks or their commercial links.
In 2023, the FCA issued more than 1,200 takedown requests for misleading financial content. But it remains hard to regulate, especially when posts are created overseas or go viral quickly. The FCA has warned that many people are acting on advice that isn’t properly checked or approved.
Younger users are particularly at risk. Copy trading is often shown as a quick way to make money, rather than a serious financial decision. These messages can create false hopes and lead to risky choices.
Some platforms now collaborate with the FCA to identify and remove harmful content. However, misleading promotions still spread rapidly — and many beginners are introduced to trading through entertainment rather than proper financial education.
Is Copy Trading a Long-Term Solution for New Investors?
Copy trading is now a popular choice for UK beginners who want a simple way to start investing. It feels more accessible and helps users learn by copying real strategies.
Copy trading is unlikely to replace traditional investing, but it’s already shaping how many new investors take their first steps. Its simplicity, mobile-first design, and social features make it well-suited to a generation raised on digital platforms.
What happens next depends on how effectively platforms strike a balance between ease of use and safety. For now, copy trading looks likely to stay as a key way for digital-first beginners to enter the market.
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