Throughout July, I actively studied copy trading, from both sides – both from the trader’s side and from the user’s side. I encountered copy trading for the first time last year, unfortunately the experience was negative. I fell for the trader’s powerful statistics, but in the end the money was lost. Now exchanges are actively promoting this type of trading, and at the top of the ratings are traders who have thousands of ROI percent of profits, but will you become rich with them? More likely no than yes. This is what my analysis showed.
1. High risks. To make huge ROI percentages, you need to trade exclusively with 50's leverage. Perhaps some transactions will bring profit, but in general, such leverage will eliminate your transaction volume with any minor movement in the market. The trader can add margin, but as a result, and this can be seen on the screen, everyone who repeats transactions goes into deep minuses. For example, the trader’s ROI is +6491%, and the PNL of subscribers is MINUS $419,824. The trader has an income of $13,858, and subscribers have losses of almost half a million dollars. Therefore, be careful when studying statistics; ROI and PNL from a trader do not guarantee your income. Moreover, scroll through traders with thousands of% profit - these are huge risks; responsible traders with good results over a long distance are in the middle of the ratings. It is extremely important to do your research and analyze traders' performance before copying their trades!
2. A trader's past performance does not guarantee future results. It often happens that a trader first demonstrates good results, and then loses money. Perhaps some traders can work in the interests of the exchange, but not all can show stable results over the long term - this is a fact. Choosing a responsible and reliable trader to copy is key.
3. Risks of thoughtless copying. Copying trades without understanding the trader's strategy or approach can be dangerous. It is important to understand how the chosen trader works and what risks he takes. This will allow you to make more informed decisions and, if necessary, disconnect from copying. For example, I see this in private and am trying to build a clearer interaction process; perhaps I will exclude transactions with cross-margin, because they carry increased risk for those who copy trades. Isolated margin is more manageable in terms of risk management.
4. Copying several traders. If you copy multiple traders, your portfolio may become too diverse and complex to manage. You may encounter conflicting signals and strategies, which can complicate decision-making and lead to additional costs.
👉On the one hand, copy trading can be an interesting and convenient way to participate in trading, but always remember that investments always involve risks, it is important to conduct a thorough analysis to find a responsible trader.