Whether a novice can make money by copying contracts depends on the following key factors: the copying platform selected, the level of the trader being copied, the market situation, and one's own risk control awareness. Although copying transactions reduces the complexity of operations, it is not a sure win, and there are both risks and opportunities.
Advantages of copy trading
Suitable for beginners: Novices usually lack trading experience, and copy trading allows them to copy the strategies of experienced traders without having to conduct complex market analysis themselves, allowing them to get started quickly.
Save time: Contract trading requires real-time monitoring of the market, but copy trading does not require personal operation, which can save a lot of time and leave the decision-making to professional traders.
Learning opportunities: During the copy trading process, you can observe the operating strategies and risk control models of excellent traders and gradually improve your own trading capabilities.
Diversified strategies: Some copy trading platforms allow investors to choose different traders and strategies to diversify investment risks and reduce losses caused by mistakes in a single strategy.
Risks of copying orders
Traders have varying levels of skill:
Not all traders can make stable profits in the long term. Some traders may perform well in the short term, but as market conditions change, they may suffer huge losses.
In order to attract copycat users, traders on some platforms may adopt high-risk, high-leverage strategies, which can easily lead to margin calls.
Market fluctuations:
Contract trading is greatly affected by market fluctuations. If the market fluctuates violently, the copy trader's strategy may fail, resulting in losses.
The performance of copy trading in a bull market and a bear market is very different. In a bull market, the high returns of traders may make novices ignore the risks, while in a bear market, the magnified losses will catch people off guard.
Platform Reliability:
Different platforms have different levels of strictness in screening traders. Some platforms may lack historical performance reviews of traders or even engage in false advertising.
Delays or problems in the platform system may also result in trading instructions not being executed in a timely manner, thereby affecting profits.
Weak risk control awareness:
Newbies often lack risk awareness and may blindly follow certain high-leverage transactions, resulting in a quick liquidation.
Not understanding the contract mechanics (such as liquidation rules and funding rates) can also increase potential losses.
How to increase the probability of making money by following orders?
Choose a reliable platform:
Ensure that the platform is transparent, the transaction data is authentic, and can provide detailed historical performance records of traders (such as rate of return, maximum drawdown, transaction frequency, etc.).
The platform should have a clear risk control mechanism, such as restrictions on high-leverage strategies and trader screening and review.
Screening excellent traders:
Check the historical profit and drawdown data of traders and choose traders with strong profitability and small drawdown.
Prioritize traders with solid strategies over high-risk traders with short-term bursts.
Control the amount of documentary orders:
It is recommended that novices test the waters with a small amount of money in the early stages and not invest too much at one time.
Diversify your investments across multiple traders to reduce the risk of a single strategy going wrong.
Set stop loss and take profit:
Even if you are copying a trade, you can still set your own stop loss line. For example, if the loss reaches 5%-10% of the principal, stop copying the trade.
After reaching a certain profit, consider partially withdrawing cash or transferring the proceeds to low-risk assets.
Keep observing and adjusting:
Don't blindly trust a single trader, evaluate their performance regularly, and if you find that the trader's strategy is ineffective, you should change it in time.
Pay attention to market conditions and avoid over-reliance on copying orders during periods of drastic fluctuations.
Summarize
Copying contracts can make money, but it is not a sure thing. For beginners, copying is a good tool to learn trading and reduce operational complexity, but it cannot completely avoid risks. Choosing a reliable copying platform, a stable trader, and doing a good job of risk management can increase the probability of profit. Don't blindly pursue high returns and avoid liquidation due to lack of risk control awareness.