Copy Trading and Signal Groups: What the Rules Actually Say
✓ Last verified 2026-07-27
“Just copy my trades” is one of the most common offers a new Filipino trader encounters — in Telegram groups, on TikTok, inside broker platforms with a built-in copy feature. It’s presented as a shortcut past the learning curve.
There’s a regulatory question underneath it that almost nobody raises, and it’s the one that determines what protection you have when things go wrong.
The line regulators actually draw
Financial regulators distinguish between two situations, and the distinction isn’t about branding — it’s about who pulls the trigger.
If your account executes someone else’s trades automatically, without you deciding on each one, then someone is exercising discretion over your money. Under EU rules, services that automatically execute third-party trade signals on a client’s behalf will regularly qualify as portfolio management — a regulated activity that requires authorisation.
If the service only sends you a recommendation and you place the trade yourself, it may instead fall under investment advice or arranging — different rules, but still potentially regulated activity depending on the jurisdiction and how it’s presented.
Notably, the fact that you set parameters — how much to invest, how much you’re prepared to lose — does not change the classification. Choosing your risk limit doesn’t make you the one making investment decisions.
The FCA has published guidance on when copy trading constitutes portfolio management. ESMA issued a supervisory briefing on it in 2023. IOSCO published on imitative trading practices in 2025. This is an area regulators have been actively tightening, which tells you something about the harm they’ve been seeing.
Why this matters to you practically
When an activity is regulated, the firm carrying it out owes you specific duties: assessing whether the service is suitable for you, conduct standards, disclosure, reporting, and access to complaints and — where applicable — compensation mechanisms.
When the same activity is carried out by someone unauthorised, you have none of that. You have a person on Telegram.
Concretely, the difference shows up as:
- No suitability assessment. Nobody has asked whether this is appropriate for your finances or experience — because nobody is required to.
- No verified track record. Screenshots of profits are not audited statements, and demo accounts produce identical-looking screenshots.
- No complaints route. If you lose money following signals, there is no ombudsman for an anonymous account.
- No compensation scheme. These cover firm failure at authorised firms, not losses from following advice.
The incentive problem nobody mentions
Ask a plain question about any copy or signal service: how does the person providing it earn?
Three common answers, in descending order of alignment with your interests:
Performance fees from copiers. Their earnings track your gains. Imperfect — it can encourage excessive risk-taking, since their downside is capped at zero while yours isn’t — but at least directionally aligned.
A flat subscription. They earn whether you win or lose. Neutral at best. The incentive is to retain subscribers, which means producing exciting content, which is not the same as producing good trades.
Commission on the volume you trade, or a referral fee from the broker. This is the one to watch. If the signal provider is paid per lot traded, or receives a share of the spread you pay, then their income rises when you trade more — regardless of outcome. High signal frequency becomes profitable for them and expensive for you.
That last arrangement is extremely common and rarely disclosed prominently. It’s worth asking about directly, in writing.
Questions to ask before connecting an account
- Who is the legal entity providing this service, and are they authorised for it? Check the name on a regulator’s register, not the brand.
- How is the provider compensated, and by whom? If the answer includes volume or referral payments from a broker, factor that in.
- Is the track record verified by a third party, covering all trades including losing ones and closed periods — or is it screenshots?
- What is the maximum drawdown the strategy has experienced? A provider who can’t answer this precisely hasn’t measured their own risk.
- What access does connecting my account grant? Copy functionality should never require your withdrawal credentials. If someone asks for login details that allow fund transfers, that is a different and much more serious problem.
- How do I stop? Know the disconnection procedure before you need it, not during a drawdown.
The uncomfortable part
Copying someone else’s trades doesn’t remove risk. It transfers the decision to someone whose finances, time horizon, and risk tolerance are not yours, and whose incentives may not be either.
A strategy that a provider can survive — because it’s one of several income streams, and they can absorb a 40% drawdown — may be one you cannot survive, because it’s your savings.
None of this makes copy trading inherently fraudulent. Regulated, authorised copy trading services exist and operate within a supervisory framework. The point is narrower: know which kind you’re using, and know how the person on the other end gets paid.
Educational content only. This is not investment advice. Trading carries a high risk of loss.
Sources: FCA — Copy trading, IOSCO — Online Imitative Trading Practices