What is FX copy trading? An investigation into its legality and potential for fraud

FX copy trading is a trading system similar to automated trading that can be used with overseas FX brokers. that helps you succeed by copying the discretionary trading strategies of professional traders .

"How is copy trading different from automated trading?"

"I heard that copy trading is illegal?"

"What are the advantages and disadvantages of copy trading?"

You probably have many questions about FX copy trading, such as those mentioned above. that copying discretionary trades is illegal , and rumors of fraud so it's important to check these points.

This article explains the features and mechanisms of FX copy trading . also thoroughly investigated its legality and the possibility of fraud . After reading this article, you should be able to start copy trading with peace of mind. Please use it as a reference.

If you're new to overseas forex trading, we recommend reading the complete guide for overseas forex trading beginners

What is FX copy trading? An explanation of cases where it becomes illegal

What is FX copy trading?、

This refers to a trading method that links the discretionary trading strategies of advanced traders and professionals to the trading screen of the user

Copy trading, also known as "copy trading,"

Even without trading skills or experience, you can become a professionalFX trading can be copiedInstead, in some casesillegal actorscamBecause of this possibility, you must be very careful. We will also explain here the cases in which it may be illegal and the points to be aware of

First, let's look at the features and mechanisms of FX copy trading (copy trading)

Features and Mechanisms of FX Copy Trading

The characteristics of copy trading are、

The key feature is that it allows you to directly copy real-time discretionary trading, rather than relying on pre-programmed trading strategies

The system that allows discretionary trading to be copied works linking a high-performing trader (provider) a user (follower) who copies it

Image of copy trading

By opening a copy trading account with an overseas forex broker, are directly reflected in the user's (follower's) trading account

Every time the provider makes a trade at their discretion, the exact same trade is automatically duplicated in the follower's copy trading account. To put it simply, it's as if the provider is making trades on the follower's trading screen

Funding, trading volume, and leverage are set by the followers

Providers typically trade with larger amounts of capital and currency (lots). Followers can freely set how much capital and currency (lots) they use

Even if the provider is trading 10 lots with 1 million yen, followers can copy trade according to their own trading plan, such as 0.1 lots with 30,000 yen

Setting the leverage is also at the discretion of the follower.

Since followers can set the amount of capital, currency volume, and leverage, they can easily start copy trading with a small amount of capital

Fees vary depending on the provider

Copy trading fees are deducted from profits as a percentage of the commission charged. The percentage of the commission varies depending on the provider.

Generally, commission fees range from 0% to 50%

For example, XM Trading charges a commission of 10% to 30%, HF Market charges an average of 20% to 35%. There are also copy trading services that are free or charge as much as 50%. However, free services and those with excessively high commissions do not have a good reputation.

Traders with higher trading skills tend to have slightly higher fees , around 20% to 30% is ideal .

No fees (commission fees) are charged in the event of a loss

fee charged for copy trading the commission on the profits earned .

There are no fees if losses occur

You won't be charged fees even if you haven't made any money from trading. While it's not 100% risky because your balance will decrease with losses, you don't have to pay fees for losing trades .

Is FX copy trading illegal in Japan?

Another characteristic of copy trading is it is basically offered by overseas forex brokers . Although some foreign companies have introduced it in Japan, the providers are generally overseas companies.

This is because, in Japan, if someone other than the principal investor (an agent) manages assets , obtain authorization and registration under the Financial Instruments and Exchange Act . When someone trades on behalf of the principal investor, rather than using an automated trading program, it is legally considered "asset management agency business" and requires a license.

We provide "investment advisory and agency services"If domestic financial institutions or individuals engage in such activities without authorization, it constitutes a violationThis is the result

Incidentally, some domestic FX brokers offer "mirror trading" strategies that allow you to copy the FX trades of other traders. Domestic FX brokers are licensed by the Financial Services Agency. It is not illegal if the service is offered by a broker registered as an "investment advisory and agency business."

Is FX copy trading not illegal in overseas FX markets?

Japanese financial instruments and exchange laws apply to financial institutions that have a base of operations in Japan. It is not possible to regulate overseas financial institutions that do not have a base in Japan under Japanese law

Therefore, copy trading by overseas forex brokers is outside the scope of the law, and using it of one's own free will does not constitute a violation.

However, it is illegal for overseas forex brokers to conduct forex service business activities in Japan, including copy trading

The legality of overseas forex trading is explained in detail in "Why is overseas forex trading not recommended?"

The Illegality of Overseas Forex Trading: A Thorough Explanation of Financial Services Agency Warnings, Legal Perspectives, and How to Consult about Problems

Profits from FX copy trading require filing a tax return

One more thing I'd like to add is that even with copy trading in overseas forex, if your profits exceed a certain amount, you will need to file a tax return.

Taxes on overseas forex trading are classified as "miscellaneous income subject to comprehensive taxation." your profit after deducting necessary expenses exceeds 200,000 yen, you are obligated to file a tax return and pay taxes.

Unlike the 20.315% tax rate for domestic FX trading, the tax rate is calculated using a progressive tax system where the tax rate changes according to the total income

The progressive tax rate applicable to overseas forex trading ranges from 5% to a maximum of 45% (approximately 55% including local taxes)

If you don't declare the money you earned from copy trading on your tax return,illegal actTherefore, if you make a profit of 200,000 yen or more, there is a chance that it may be discovered at some point, so be sure to file a tax return and pay your taxes

For details on the differences in taxes between overseas and domestic forex trading, please refer to this article

[Tax Accountant Supervised] Complete Guide to Taxes on Overseas Forex Trading | Differences in Tax Rates and Calculation Methods Compared to Domestic Forex Trading, and How to File Your Tax Return

Is it true that there are scams involving copy trading tools?

As we have seen, FX copy trading is not illegal and is a reliable service that allows even beginners with no trading skills to engage in FX trading. However, there have been reports of suspicious fraudulent companies operating in the copy trading market

Scams that exploit people's weaknesses, such as "I don't have the skills, but I want to make money with FX."It is true that it exists

Copy trading with a highly reliable overseas forex broker reduces the risk of being scammed

Here are some examples of cases where people fall victim to fraud:

• Recruitment using LINE and social media
• Solicitation from a dating site
• Sales and solicitations for FX software
• MAM/PMAM membership registration and recruitment

In either case,Initially, there are large upfront costs such as initial fees, membership fees, and software purchase costsA key feature is that it requires no deposit. A copy trading account is an FX account that can be easily started with any deposit amount. High fees are not required

Now, let's take a closer look at the actual methods used in copy trading scams

Copy trading scam example 1: Solicitation via LINE/SNS

Not limited to copy trading, a common type of FX scam involves using LINE and social media to solicit customers for "FX products."

In particular, there are many scams using LINE group chatsWarnings from LINE official channels and domestic financial institutionsThis is what's happening. It's important to understand the tactics used to determine if something is a scam

"Investment solicitations from individuals impersonating celebrities or investors."

"They lure people they meet on external social media or dating apps to LINE and then recruit them."

"Investment products are introduced by the instructor of the investment group."

The image of recruiting via social media

Members of the scam introduce investment products such as copy trading and automated trading software to victims in a natural way. The victims are cleverly persuaded and purchase and deposit money with high expectations

After some time, people realize they've been scammed because they can't withdraw their money, can't get in touch with the company, or are charged exorbitant penalties

The moment you realize you've been scammed because you can't get in touch with them

By the time you realize you've been scammed, it's often too late. Of course, not all solicitations are scams. Some are genuine recommendations. However, they build trust and romantic feelings through unrelated conversations before making . In reality, it's difficult to tell the difference.

For now,You should be suspicious of any money-related talk you receive on social mediaIt's a safe bet

Here are the fraud warnings from the National Police Agency and the Financial Services Agency

"I was solicited to invest...that's a scam!"

"Beware of tempting investment schemes!" - Financial Services Agency

Beware of get-rich-quick schemes using social media! – National Police Agency

Copy trading scam example 2: MAM/PMAM

Other products used in scams include MAM and PAMM, which are overseas forex financial products

This is an FX service similar to copy trading, but it differs in that you entrust your FX trading to a specific person

These services are trading methods offered by overseas forex brokers and are not inherently suspicious. However, just as you can lose money with mutual funds, using MAM/PAMM does not guarantee profits

Furthermore, the fact that you cannot suspend or cancel the service during the contract period is a disadvantageous condition, so you need to consider it carefully

This system has been used to introduce MAMs and PAMMs of unknown overseas forex brokers , and scams have been reported where people are tricked into opening forex accounts that don't even exist

Even in the case of malicious MAM/PAMM recruitment,Similarly, cases where LINE or social media are usedIt seems that this is the most common

Be wary of claims that you can "make money" through copy trading

Cases where copy trading is used for fraud includeThey advertise that it is "guaranteed to be profitable" and "100% profitable."That's the point. The world isn't that easy. Anyone who knows about FX and is a sensible referrer would never use such words

Even with professional management, no one can predict future price movements, so there is always a risk of loss . Even top managers at major hedge funds like JP Morgan and BlackRock sometimes incur losses.

Even the most skilled trader doesn't always win. Therefore,Be extremely cautious of claims about "products that don't incur losses."You must

Measures against copy trading scams

Here's a summary of how to protect yourself from copy trading scams

• I do not buy copy trading (FX products) that are advertised on social media
• Use copy trading from a reliable overseas forex broker
• Avoid anything that incurs costs other than commission fees

To avoid fraud, the safest method is to directly use copy trading services from a reputable overseas forex broker. Furthermore, with a few exceptions (BigBoss requires an initial fee), copy trading typically only involves commission fees.

Copy trading schemes that involve excessive costs, such as initial fees, should be viewed with suspicion as potential scams

Consult with the Financial Services Agency, the police, or the Consumer Center

In the unlikely event that you receive a suspicious offer or have already made a purchase,Don't hesitate to consult a public institutionLet's do that. The Financial Services Agency, the police, and consumer centers (National Consumer Affairs Center) accept consultations

• Financial Services User Consultation Office – Financial Services Agency
• Police consultation hotline
• Consumer Center (National Consumer Affairs Center)

Four suspects arrested for copy trading (mirror trading) fraud

While it's difficult to resolve frauds committed by overseas companies domestically, if Japanese nationals are involved it can sometimes lead to the arrest of the fraudsters.

Types of FX copy trading and trading methods

To avoid scams, deepening your knowledge of FX copy trading will help guide you towards safe use. Here, we will explain the types of copy trading and trading methods

Copy trading can be categorized into several types based on differences in "provider," "usage method," and "trading strategy

Let's look at each type one by one to see how they can be classified

CopyTrain Usage Patterns

There are three main ways in which copy trading is

• Register on a platform dedicated to copy trading
• Open an FX account specifically for copy trading
• It is attached to a regular FX account

a dedicated copy trading platform without opening an account . Registration allows you to link it to your existing FX account.

The next most common a dedicated copy trading account is provided. In this case, you open a copy trading account and begin copy trading. Sometimes, platform installation is also required at the same time.

The easiest way to use copy trading it's already included as a standard feature in your regular FX account . In this case, you can start using copy trading immediately without doing anything.

CopyTrain provider

Copy trading platforms can be categorized into three types.

• Provided by overseas forex brokers
• Provided by software companies (third-party platforms)
• MT4 and MT5 are available

A common pattern among providers is that overseas forex brokers adopt copy trading systems developed and provided by other software companies

"Mirror Trader," which was once very popular, falls into this pattern. That's why you see the same copy trading tools from other companies as well.

Another option is developed in-house by overseas forex brokers . Furthermore, "signal trading" available on MT4 and MT5. However, a characteristic of "signal trading" on MT4 and MT5 is that it often involves automated trading by Expert Advisors (EAs).

There are also significant differences in the number of providers

the number of providers varies depending on the copy trading platform you use, so you'll want to check that as well.

• Small-scale copy trading → Fewer than 50 providers
• Medium-scale copy trading → Number of providers: several hundred to around 1,000
• Large-scale copy trading → Tens of thousands or more providers

can have over 70,000 providers . Smaller-scale copy trading services offer fewer options, typically only a few dozen . On average, there seem to be around 100 to 1000 different

A larger number of providers to choose from is preferred because it increases the number of options available

Copy trading stocks and trading methods

The type of copy trading service you choose will depend on the stocks and trading methods you use

• Currency pairs/indicators → What kinds of indices will you trade?
• Spot or futures → Spot trading without leverage or futures trading with leverage?
• Discretionary trading methods → Technical or fundamental analysis?

Copy trading offers a variety of options, including providers that trade specific currency pairs

copy trade spot transactions without leverage . Spot copy trading is often available in cryptocurrency trading. Incidentally, FX trading, also known as "foreign exchange margin trading," is a type of margin trading that uses leverage.

Another skill for discretionary trading is researching providers based on the types of technical and fundamental indicators they use

The trading period varies depending on the provider

Copy trading offers different trading periods depending on the provider . Broadly speaking, they can be divided into three trading periods: short-term, medium-term, and long-term.

• Short-term (scalping/day trading) → Aiming for profits within a few minutes to a few hours
• Medium-term (swing position trading) → Aiming for profits within a few days to a few weeks
• Long-term trading → Aiming for profits over several weeks, months, or years

There are providers that aim for quick profits in the short term, and those that take a more patient, medium- to long-term approach. The best provider for you will depend on how long it takes you to make a profit

Turn 10,000 Yen into 1,000,000 Yen with Overseas Forex Trading! What's the surefire way to win the 10,000 Yen Challenge?

The difference between FX copy trading and automated trading

let's look at the differences between FX copy trading and automated trading (EA), as well as the differences between FX copy trading and other services

The difference between copy trading and EAs

The difference between copy trading and automated trading (EA) the trading is discretionary or done by a programmed robot .

EA (Expert Advisor) refers to automated trading systems included in MT4 and MT5. algorithmic analysis , it uses pre-programmed software to automatically execute trades. While it offers the advantage of being unaffected by emotions, its weakness lies in its inability to consider real-time market trends.

On the other hand, copy trading, which consists of discretionary trading performed by humans , can respond to rapid currency fluctuations with advanced skills. However, since humans are involved in the trading, it is undeniable that emotions will play a role.

*Incidentally, algorithmic analysis is an analytical method that uses vast amounts of data to derive certain patterns and trends

An introduction to automated trading (EA) in overseas forex! We explain how to get started and introduce free MT4/MT5 EAs

The difference between copy trading and mirror trading

There isn't a significant difference between copy trading and mirror trading . Copy trading is sometimes referred to as mirror trading.

Copy trading came to be called mirror trading because there was originally a service called "Mirror Trader" that served as the prototype for copy trading

"Mirror Trader" is an automated trading platform developed by Israeli company Trendency, which emerged in 2005 during the early days of automated trading . It quickly became popular at the time because it could copy strategies and discretionary trades as if mirroring them.

The first automated trading system to arrive in Japan was "Mirror Trader," and since then, automated trading and copy trading have come to be called "Mirror Trade."

The difference between MAM and PAMM in copy trading

The difference between copy trading and MAM/PAMM lies in who is primarily responsible for asset management . In copy trading, the user has the final say, while in MAM/PAMM, the fund manager holds the decision-making power.

With copy trading, the one who decides to use it and when to stop using it . Lot size and investment amount can all be set at the user's discretion, as long as they exceed the specified limits.

However, MAM and PAMM where you only entrust your funds to an investment fund manager, leaving everything else to them . You can't even decide on the trading volume or when to stop trading.

Some copy trading systems allow you to set stop-loss and take-profit levels. of copy trading is its greater customization and user-centricity . It allows for more flexible trading strategies.

The difference between copy trading and social trading

Copy trading is sometimes called social trading , and there is no significant difference between the two.

refers to a community website where investors gather to exchange information and provide services .

Social trading allows investors to incorporate the methods and ideas of other investors, and copy trading is available as part of the service. The term "social trading" is sometimes used to refer to copy trading.

In addition to copy trading, automated trading (EAs) on MT4 and MT5 are also popular. Basic knowledge about EAs "Introduction to Automated Trading (EAs) in Overseas Forex!" . If you are interested, please refer to it.

Complete Guide to Automated Trading (EA) in Overseas Forex | How to Set Up EAs in MT4/MT5 and Solutions for When They Don't Work

Advantages of FX copy trading

We've now reached the final stage of our understanding of FX copy trading. To summarize our knowledge of copy trading, let's look at its advantages and disadvantages

Let's start by looking at the advantages。

Trade FX using discretionary trading strategies employed by professionals and advanced traders!

The biggest advantage of copy trading is that it gives beginners and those without advanced trading skills the chance to make money through professional discretionary trading .

Constantly monitoring charts, conducting market analysis and currency forecasts, and buying and selling currency pairs is no easy task. Many people who want to make money through FX trading feel frustrated because they don't know or can't find the time they need

You can choose a provider based on their past performance, current profit/loss, trading methods, and number of followers, selecting one that has a high probability of being profitable

It's great to be able to expect profits while reducing the risk of losses with the trading skills of experienced

You can freely choose your investment amount and fees!

One of the advantages of copy trading is that your needs, including the amount of capital to invest and the fees, from a wide variety of options

Copy trading is offered by more than 10 overseas forex brokers, with hundreds to tens of thousands of providers registered to each copy trading platform. Each provider has different recommended capital amounts and fees ; some require a large sum of money, while others allow trading with small amounts, giving you the freedom to choose.

The appeal lies in the fact that you can set your own lot size, leverage, and deposit amount, allowing you to participate at your own pace

Learn excellent trading techniques!

Some say, "You might win if you copy professional trades, but your own skills won't improve."

Certainly, if you do nothing and leave everything to others, your trading skills won't improve. However, by looking at the trading history of professionals and using it "what timing" they use to trade , you can learn a lot.

Comparing multiple providers and trying your hand at discretionary trading improved trading skills .

This will not only allow you to experience excellent skills, but it will also be useful as an investment strategy that allows you to earn well-balanced profits through diversification

Disadvantages of FX copy trading

Now, let's continue by looking at the disadvantages

Choosing an internet provider takes so much time!

Whether you can make money with copy trading depends on the providerUser revenue is at the discretion of the providerTherefore, you will need to spend time searching for information about the provider

One of the downsides of copy trading is that it takes time to choose a provider

Choosing an internet provider based on intuition or whim blindly trusting ratings and reviews is also dangerous.

You need to find evidence to support your belief that a particular provider is profitable, including their past trading performance, trading methods, and current profit/loss

Fees and success-based commissions will be deducted!

Another disadvantage of copy trading is that it involves a certain level of commission fees

Simply put, the more successful a trader is, the more advanced their skills are likely to be. Since copy trading generates revenue for the provider when users win, they naturally put in a lot of effort. However, revealing advanced skills to others is equivalent to disclosing a carefully crafted, top-secret method

That comes at a considerably high priceThe more skilled the provider, the more expensive it becomesIt is a trend

Even the best providers aren't guaranteed to win!

And one important drawback that shouldn't be forgotten is that even excellent providers can lose

For better or for worse, no one can accurately predict the future . It's precisely because the future is uncertain that one can profit from investing and FX trading. Therefore, even the most reputable providers' market forecasts can be wrong.

Due to various factors such as technical indicators, fundamentals, and breaking news, the market can sometimes plummet or surge in unexpected directions. Even successful traders who have a winning streak,The risk of losses increasing contrary to expectationsIt holds a secret

While it's possible to earn money even without skills, be aware that there is a risk of loss involved

Overseas FX brokers that offer FX copy trading

So, which overseas forex brokers offer copy trading?

Previously, there were few overseas forex brokers offering copy trading, but in recent years, the number of brokers that have started offering it has increased significantly. Copy trading is particularly expanding in new areas such as cryptocurrencies

Here a list of overseas forex brokers that offer copy trading .

, be sure to check the overall rating in the recommended rankings of overseas forex brokers, which are created based on reputation and customer reviews

List of 12 Overseas Forex Brokers Offering Copy Trading

The names of the copy trading services, deposit amounts, and fees offered by each FX broker are as follows:

Overseas Forex Broker / Account/Tool Name	Number of providers / Registered / Not registered	Minimum deposit amount / Fees
HF Market HF Copy	• Over 400 users • No registration required, easy operation	・25USD~ ・25%~35% (average)
Three Trader HUBx Tool	Registered with an unspecified	• 10,000 yen and up • Free • Paid
Titan FX Titan FX Social	- Unspecified - Registration via app	• $50 and up • 10% to 30% (average)
Exness Social Trading	• Over 1400 • Registered via app	- by the provider ・0～50％
Jade Forex Copy Trading Account	- Unspecified - Account opening required	- Provided by the provider - Free - Paid
StarTrader Copy Trading Account	• Over 45,000 • Account opening required	$500 , 10%–20% (average)
Vantage Copy Trading Account	• Over 70,000 • Account opening required	・50USD~ ・20%~30% (average)
XM Trading Investor Account	- Unspecified - Account opening required	No regulations ・0％～50％
BigBoss MASS account	- Unspecified - Registration required	• Initial fee: $2000 • Monthly fee: $300
Axiory MT4/MT5 Signals	- Unspecified - Registration required	• Over $100 • 25-30% (average)
Bing Xcopy Trading Account	・2000 or more ・Registration required	- Varies by brand and provider - 0 yen to 0.1%
Tradeview cTrader tool	• Over 500 users • No registration required • Easy operation	• Over $100 • 25-30% (average)

When it comes to copy trading, the first name that comes to mind is HF Market 's copy trading.

HFM's copy trading service allows you to check detailed provider information without opening an account. The system is clearly explained, making it highly transparent and safe to use

Established overseas forex brokers include TitanFX and XM Trading, while newer options like Vantage, Jade Forex, and Star Trade are also worth trying.

If you're interested in cryptocurrencies , you should also keep an eye on copy trading strategies like BingX and Three Trader.

HFM Reputation and Reviews | Thorough Investigation of Safety and Withdrawal Refusal Cases

https://money-charger.com/trader/vantage-trading/

Tips and precautions for success in FX copy trading

Finally, let's review the tips and precautions for success with copy trading

Choose a reliable trading tool with a large following

To avoid failure with copy trading, the first step choose a tool from a trustworthy company that is not suspected of being a scam .

There are four key points to consider when choosing a reliable copy trading service that you can use with peace of mind

Points to note

Avoid using copy trading services where information is not available in Japanese, or where the terms of use (such as fees) are not clearly stated

Always check your trading performance and profit/loss status

Also, when choosing an internet provider, be sure to check the following four items

the performance graph is trending upwards , it indicates that the account is generating stable profits. longer the trading period , the more reliable it becomes. Furthermore, accounts with a low drawdown rate ( and a large number of followers can be expected to generate safe profits.

Points to note

A high drawdown rate indicates a higher risk of stop-loss. Checking the drawdown is essential

If it's not generating profits, consider suspending operations

copy trading doesn't yield results or losses increase, it's crucial to consider "cutting losses" or "stopping trading" early on. Taking action to cut losses requires strong willpower and experience. Beginners in FX often hesitate due to their lack of experience.

However, leaving losses unchecked increases the risk of a margin call, potentially leading to the loss of a significant portion of your capital. Anticipating the possibility of a margin call and cutting your losses is the key to surviving in forex trading.

Points to note

There are plenty of providers to choose from, so even with copy trading, you should develop the skills to decide when to stop or cut losses

[Overseas Forex] What is a stop-loss? Explanation of its meaning, calculation method, and levels for beginners

Summary: Start trading forex overseas with copy trading!

FX copy trading is a service that allows you to copy the discretionary trading strategies of advanced traders and professional traders

By choosing a reputable provider, even beginners and those without trading skills can expect to earn profits while learning. It's also recommended for people who don't have much time due to their main job, as well as experienced investors who want to diversify their investments.

However, as explained here, anything being offered domestically without registration is illegalSome copy trading schemes are maliciousYes, they exist. Please be very careful of copy trading scams

By using well-known and reputable overseas forex brokers, you can significantly reduce the risk of fraud. introduces trustworthy overseas forex brokers

Opening an account through our website is incredibly advantageous, as you'll receive cashback with every trade . Why not take this opportunity to start trading overseas forex with copy trading?

Overseas Forex Account Opening Bonus & Deposit Bonus Comparison Ranking! [Latest January 2026] Broker List