Why is it difficult to make money by copying trades?

1. First of all, you cannot guarantee that the KOL you are following has an absolute advantage in the market:

An absolute advantage means either you have insider information, like being the son of a prominent figure, or you have an extremely impressive strategy, like Vida from the Dragon King's black and white equation, or you are someone who excels in subjective trading in the secondary market and has at least a year of performance to validate it, like Tony's eagle watching.

Only in this way can you have a foundation for winning when copying trades.

Most people's targets for copying trades achieve their performance based solely on a certain explosive market trend, which lacks sustainability and stability; once the market changes, it may lead to losses.

2. The magic of continuous extraction:

This is actually a mathematical problem, but most people who are being extracted from find it hard to realize.

For example, if your principal is 10,000, with an annual return rate of 50%, and you invest for 5 years; however, the profit is extracted by 20%, there are two scenarios:

The first scenario: settle every year, in the end, your funds amount to 53,000; with an extraction of 11,000;

The second scenario: settle after 5 years, in the end, your funds amount to 63,000, with an extraction of 13,000;

You can see that although the total amount extracted in the first scenario is less, your profit is lower than in scenario two. This is the magic of continuous extraction.

Platforms like OKX and Binance extract every week, taking 10% each time, and they do not compensate you for losses even on profits; with a higher extraction frequency, what seems like a 3:1 profit-loss ratio may actually turn into only 1.5 after continuous extraction. If the market is not favorable, you will lose money, leaving only the trader and the platform with substantial profits.

Therefore, even if you select skilled traders to follow and adhere to impressive strategies, it is still difficult to overcome the odds in the end.

This is not only the reason why it is hard to make money by copying trades, but also why most people struggle to make money through frequent trading.

Stay away from anything that prompts you to trade frequently and stirs your greed; this is the first step for ordinary people to survive in the market.