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CopyTrader: Plugin or API

by | Jun 29, 2021 | Blog

Is a Copytrader plugin or API most preferred for my white label solution, many brokers asked. We hope this article may help to clarify the differences between them. First, why are we talking about copytrading and not talk about a MAM, which is a ‘multi account manager’? In context, copytrading means slave accounts subscribe to one or several master trading accounts, and mimic trades in a similar direction. Copytrading understands that the market is subject to the availability of liquidity, therefore the copytrader follows the master account’s trading direction, at the same time realize that trade fills are not executed at a single price. For more sophisticated and experienced traders, they will know that this is most practical, reason, they know liquidity fluctuates according to the ebb and flow of market prices. Therefore, copytrader is a safe bet for both the client and the managed account manager, as the client does not want to be disappointed when he or she discovers that a fill price was confirmed differently for another client due to market slippage, on the same managed account manager. For the managed account manager who execute large trades in the market, he can save the hassle to manually calculate and adjust trade confirmations due to slippage from the liquidity provider. If this is not done timely enough, the managed account manager may be accused with toggling audited data, and run into legal risks as well. 

In my opinion, Copytrader is the best choice if you make very large trade sizes to your liquidity provider per clip. For the MAM, it executes and return trade entries at a single price. This in my opinion, is not something practical if you are using a liquidity provider to trade into the actual market, unless you are market making on your own managed account managers. Then MAM will be most ideal, as all trades are returned at a single price. Social trading platforms are typically using copytrader as their preferred structure, as this reduces lots of potential trade dispute issues for the social trading firm.  

On whether using a Copytrader plugin or API as an addition to your trading platform, it depends on how you would like to present information to your customers. For execution efficiency, plugin is definitely most preferred. The plugin is latched on your trading server, so trades can easily be confirmed with milliseconds. For API type copytrader, it is typically connected to your trading API, this allows the broker to be more versatile when presenting information on their CRM or backoffice portals. However, the broker needs to closely monitor for uptime connectivity during weekends or daily reboots for the trading server. The API is more illustrative and versatile in design, where the plugin version is more hard coded and rigid, however it has very low latency on execution. 

If copytrader is a function that you intend to deploy for your managed account or brokerage services, reach us here.

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