Copy trading

Copy trading is automatically mirroring another trader's trades in your own account, scaled to the amount you allocate. You copy their profits, their losses and their mistakes.

How it works

You pick a trader from a leaderboard on an exchange or platform and allocate an amount. When they open or close a position, the same trade opens in your account, sized to your allocation. The trader usually takes a share of your profit.

Leaderboards show past returns, and those are easy to misread. A huge percentage may come from high leverage and luck over a short window, and the next drawdown can wipe the account. Look at maximum drawdown, track record length, leverage used and whether followers are actually making money.

Your result is almost always worse than the trader's: you enter slightly later at a different price, and you pay fees plus their profit share. Copy trading does not remove your risk. It is still trading, just with someone else's decisions.

Example with numbers

You allocate $500 to copy a trader with a $10,000 account. They open a trade worth 20% of their account ($2,000), so a trade worth 20% of $500, which is $100, opens for you. If they make 10% on it, you get about $10 before fees and their share (say 10% of the profit).

Common mistake

The biggest mistake is picking the trader with the highest 30-day return. Those numbers usually come from high leverage and luck. Look at drawdown and at least a year of history, allocate only money you can afford to lose, and set your own loss limit on the copy if the platform allows it.

Questions and answers

What is copy trading in simple terms?

Your account automatically repeats the trades of a trader you choose. Their gains and losses show up in your account in proportion to what you allocated.

Can you lose money copy trading?

Yes, all of it. If the trader uses high leverage or hits a losing streak, your account loses along with theirs.

Is copy trading a scam?

The mechanism itself is not, but scammers use it: a social media mentor invites you to copy them on a fake platform. Copy only inside a service you have verified and never send money to individuals.

Copy trading

How it works

Questions and answers

Related terms

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