Is copy trading profitable? Nope.
However, I wish you can refute this with your own experience. I take responsibility for my words, there are too many frauds in copy leaders, and most of copy traders lose their money. But if you insist doing this, read this article all along, it will save you from losing half of your principal.
1. Why be careful?
The only con of leading trade is, one may be contered by dealers, but that's the case for those who have millions of money. Besides this, you get share in the profit and rebate. Casinos near Lasvegas are not allowed to bet with gamblers, so any gambler with enough money can be a dealer, receiving money from other gamblers, which is profitable in the long term(Positive EV). As for copy leaders, they take responsibility for maximizing their profit, and as for us, the copy traders, we should also take care of our very own money.
2. Key takeaways:
2.1 Losing is easier than winning.
Let's say you get 10 USDT("u" to be short), you lose 50% and earn 50%(10×0.5×1.5 = 7.5), you only get 7.5 as result. This is the key throughtout the entire article.
2.2 Don't be in a hurry to either losing, or winning.
It's not something urgent to lose your money, same to making profit. "They doubled their profit, they ain't losing in a whole month, they are making money I want to add more principal", When you found that a copy leader is making profit, don't copy them directly(or add principal), wait until they lose, you may found them losing half of the copy traders(that's also the reason some portfolios aren't full), and found yourself not wanting to copy them.
2.3 Copying trade means copying strategy.
It's not about copying the leader, instead, you are copying the strategy. Some people may build trust with copy leaders, and some may copied strategies that are identical.
I don't mean something personal, I mean, it's always unworthy to trust the personality of a copy leader. Changole, onlyKnowHelloWorld, usur, BBSheng, they are repeating the "conversable-lose-silent-lose-close portfolio" cycle. "They are replaying, they are saying sorry", actually they are replaying losing money itself, and if a good attitude can make money, why not doing customer service?
For the latter, it's like buying fundation of S&P 500 from different companies, it simply won't spread the risk.
2.4 Doing short requires stop-loss, doing long requires PLR.
Not setting stop-loss and holding long in short earns tens and loses hundred, not having a good PLR in long makes it not profitable at all.
3. Traps in copy trading
3.1 Hedging
I mean hedging in accounts. For example, the same copy leader buys in the main account and sells in other account, if it wins, they get shared in profit, and if it loses, the other account wins.
"Even if they are hedging in accounts, if they win, they win!" In this case, copy leader will consistently do all-ins to maximize their profit, and be liquidated soon.
Taking YHW as an example, he closed portfolios in 12 times, be liquidated in multiple times, why he always have the money to open a new portfolio? Simple, he isn't losing at the beginning.
How to identify hedging in accounts? 1. The times they close the portfolio(nobody closes portfolio for being profitable), combining with days trading so you can make sure it's not the different account of same person. 2. Transfer history: they add money on losing and take money on winning. Why? Let's say there're two accounts, both have 10u, they lose 50% and earn 50%, 10×0.5×1.5 + 10×1.5×0.5 = 15 < 20, losing is easier than winning, if they don't keep it balanced, they loses their money in hedging. But if the leader meets the first criteria, maybe they're just doing the "best strategy"(see below). 3. You can search the exact nickname of leader in the leaderboard(by 2025/3/9, the total PNL of YHW is -13.43%).
3.2 MG
Martingale Strategy, to be short, MG, means doubling down after losing. This strategy requires buying when having unrealized loss, and not setting stop-loss, it increases the win rate, but also increases the chance of liquidation. There're always people refusing to admit defeat until faced with overwhelming evidence, chekc this out: the private portfolio of VozvnChampion trades 200+ days using MG, but liquidates on 2025/01/07, by ETH long position.
How to identify MG? Besides high win rate and smooth yield curve, check the position history: find the position that wins or loses a lot, and calculate "entry price × max open interest" if it's multiple times more than normal, then it proves that the leader is using MG.
3.3 Holding for too long
Holding for too long means "wait until it makes profit", it presented as "having unrealized loss for too long", this isn't always bad, but there're 3 problems: 1. Holding long in short, it means a loose stop-loss, making it easy to pound foolish. 2. May cause liquidation in some coins, for example, SOL, ETH and BTC, their minimal trading margin may causing those who copies with 10u to liquitate. 3. Fear of loss, some people may be scared of unrealized losses and choose to cut losses. Actually, before copying, you need to check how long in average the leader holds.
3.4 Slipperage
Slipperage means the entry price being not the same as the leader's, and usually it has a worse entry point. That's because copy trading only opens/closes position in market price, the problem is: 1. Slipperage may cause the leader to win and the copy traders to lose, especially when leader opens position at market price or frequently add to the positions(e.g. 去山洞抓老虎). 2. Opening/closing positions at market price means being taker, which results in more fee(copy leader gets rebate every Monday).
3.5 Adding margin
To prevent liquidation, some leaders will add margin, and if copy traders not adding margin in time, they will be liquidated. Taking BBSheng as example, after opening ETH long position on 2024/12/20, he added about 11586u in succession, leaving most of his copy traders liquidated(and he liquidated on 2025/02/03).
4. Categories of copy leaders:
Leaders below are only taking as examples, not recommendations!
4.1 Catching the long lower shadow
e.g. CHULTOO, DipMaster AI, YesItsAGreatStrategy, 量化金城武, Melanya, Falcon-Pro.
Features: Only long positions, catching the long lower shadow with small position.
Analysis: If the market falls continuously, it won't be profitable, and if the market crashes, it loses a lot, in other scenarios, it provides steady growth.
4.2 Small position & high frequency
e.g. GridMaster, MaximizeSR, 战神阿武.
Features: small initial position, high frequency, usually high win rate.
Analysis: High win rate in short usually means a loose stop-loss, likely to pound foolish.
4.3 Swing trading
e.g. MarinaBay, 仓老师, 去山洞抓老虎.
Features: Long holding.
Analysis: Hard to take profit and having unrealized loss most of the time.
4.4 Radical trading
e.g. 老爷保号哈, Changole, Hanged Man, 余人资本, 摩根财经.
Features: High risk & high return.
Analysis: Have to use The Kelly Formula to get the best ratio, or it won't be profitable in the long term. Taking profit is important to prevent liquidation.
4.5 Misc
e.g. huigege, 383bd, gOaTbAnKeR.
Features: Manual trading, not belonging to other categories.
4.6 Alt account
e.g. (Falcon-Pro, Stallone2222, Nasti-Pro, Rocky-Pro, Kira-Pro, Digger-Pro), (CHULTOO, Cryptoxn, Xeshua, CHULTOO_XRP, CHULTOO_DOGE), (雷克萨斯, 麦田捕手, 负责交易员, 漠河舞厅, 康斯坦丁), (摩根财经, 小米基金, 摩根基金, 志宏财经论坛, 青衣学院, 正大智能量化).
Features: Same strategy(may differ in parameters and coins), identical descriptions and account of social media.
Analysis: Copying trade means copying strategy, spreading account doesn't equal to spreading risks.
4.7 Copycats
e.g. (加州旅馆) copies 老爷保号哈, (雷克萨斯, 麦田捕手, 负责交易员, 漠河舞厅, 康斯坦丁) copies CHULTOO.
Features: Copying other leaders, may mix multiple leaders.
Analysis: Double slipperage and chance of overlapping, not recommend following them.
5. How to pick copy leaders?
Criterias here are for most people, you can soften it.
5.1 Days Trading ≥ 180 (option in web version)
The example of VozvnChampion shows that, more days trading doesn't mean stable, but those who can't even survive 180 days will only get worse. As mentioned before, don't be in a hurry to either losing, or winning.
5.2 Lots of long-term copy traders
This means the floating loss is acceptable for most people and being suitable for long-term copying. Taking 383bd as example, he has being trading for 451 days, and there's a lot of copy traders copying for over 300 days. However, taking Crypto_Money_Machine as example, they traded for 451 days with many copy traders copying for 300+ days, but since 2025/2/22, he has a drawback of 64.59%. As for avoiding this, see the "best copying strategy" below.
5.3 Closed Portfolios = 0
Nobody closes portfolio for being profitable, it's either because the leader is dissatisfied, or there's liquidation. Taking 老爷保号哈 as example, he closed portfolio for 88 times, after being liquidated for short selling IP on 2025/02/20, he apologized in his description, then, he made another big drawback on 2025/02/26, short selling IP. After closing the portfolio(the 87th time), he made yet another big drawback, and now, it's his 88th time. You know what, leaders always fall for the same case, and they only apologize for lossing money itself.
Some leader prefer making the ROI extremely high at the beginning, but they can't success everytime, so there're times they close the portfolio.
5.4 Sharpe Ratio ＞ 3
Low sharpe ration means slow recover after big drawbacks. This is basically a "wall of shame" of portfolios, it counts from day 1 and shows the long-term performance. Taking 战神阿武 as example, after 2025/1/16, there's a drawback of 41.54% and not being able to recover till this day, so the sharp ratio is negative. Taking Brave_niuniu_4 as example, they liquidated after 2025/1/30, they have a sharpe ratio of 1.02. Copy leaders always got tripped over a stone, if they have a low sharpe ratio(＜2), it just a matter of time for the next big drawback. If the times of closing portfolio is high, it's only possible that the leader is hiding something really bad.
5.5 Win Rate ＜ 90%
Here are the possibilities of high win rate: 1. only high quality right-side trading, e.g. 2LYNCH strategy. 2. MG. 3. Holding for too long. I've never seen the first case, though. Thinking the other way around, if a leader has low win rate and still being profitable, that means they strictly do stop-loss and have a good PLR. Always remember that, as long as one has a PLR of 3:1, even the win rate is 30%, they can still make money(according to Kelly formula, ratio = win rate - (1-win rate)/PLR, ratio > 0 means profitable).
5.6 No Lock-Up Period
This isn't a necessary condition, I'm mainly sharing some tricks here: 1. you can almost prevent copy leaders from opening position by setting Take Profit and Stop Loss to 0.01%, max cost per order to 5%, leverage to 1x. Please be noticed that there's still fee and sometimes it bypasses it due to slipperage. 2. Unless in lock-up period, if it fails to open position till Friday, the system will close the copy(copy leaders are not able to remove copy traders).
6. Best copying strategy:
6.1 The difference of mock copy trading and copy trading?
The formula to calculate the ROI of mock copy trading is: (Current net asset value of the Lead Trader - Net asset value of the Lead Trader at the time the mock copy trade was initiated) / Net asset value of the Lead Trader at the time the mock copy trade was initiated, it's just another form of the yield curve of copy trader(10000u is just a multiplier).
This means: 1. No slipperage. 2. You won't be scared of floating loss. 3. The ratio stays exactly the same as copy leader.
6.2 Best copying strategy?
Minimal margin→Most optimized margin→Best strategy.
Minimal margin: the minimal margin for the same ratio. Check the ratio of BTC/ETH/LTC/LINK in position history. Using the formula(Minimal margin ＝ Minimal position / The position the leader opened × Leader's margin), taking BTC as an example, if a leader has 1000u and opened 1 BTC, the minimum margin you should invest is 0.002 / 1 × 1000 ＝ 2u.
Most optimized margin: the most optimized value of margin to avoid "losing is easier than winning". Taking YesItsAGreatStrategy as example, they have a maxium drawback of 11.01%, if we want to give them 2000u, then the best margin is 2000 × (1-0.1101) ＝ 1779.8u.
Best strategy: the best strategy to avoid "losing is easier than winning". Basically, you add margin on losing and remove margin on winning. For 100u, the leader loses 30%, then earns 50%, then loses 20%, if you do nothing: 100×0.7×1.5×0.8 = 84(-16 in result). But if you use this strategy: ①100×0.7 = 70, add 30. ②100×1.5 = 150, remove 50(+20). ③100×0.8 = 80(0 loss).
Compounding interest conflicts with being stable. If you want stability, you need to take profit, but if you want compounding interest, you need to not take profit. To make it balanced, you can remove the profit till the net copy amount be negative, then not removing profit. If you chose those leaders with suprisingly low ROI, and you want compounding interest, I would recommend BN Simple Earn.
6.3 Best leverage?
First, make sure the copy leader is profitable, check the ROI of 30 and 90 days. Then, use the data in 30 days and use this formula: Best leverage = default leverage × (1/drawback - 1/ROI). Be noticed that this is not effective on leaders that uses MG or holds for too long. Taking 383bd as example, in 30 days, the ROI is 22.36%, maximum drawback is 10.5%, so the best leverage is 5/2 × (1/0.105 - 1/0.2236) ≈ 12.
This is how you get this formula: Let's say the leader loses then wins(same if inverted). Suppose the ratio of best leverage and default leverage is x, ROI is m(≥0), drawback is n(≥0), margin balance is 1, final balance is R: ①R = 1 × (1+m×x) × (1-n×x). ②R = -m×n×x^2 + (m-n)×x + 1. According to the formular to calculate peak in quadratic function(for a×x^2+b×x+c，a < 0, when x is -b/2a, it reaches the peak), ①x = -1 × (m-n) / (2×-m×n). ②x = 0.5 × [(m-n) / (m×n)]. ③x = 0.5 × (1/n - 1/m). Finally, restore the "x" to "best leverage/default leverage", you get the formula.
This formula only works for that specific period of time, it needs to be adjusted dynamically. If you use the data of 180 days, you will not only need to be prepared for copying for whole 180 days, and be sure that the copy leader not making bad decisions(the example of Crypto_Money_Machine). Besides, the copy leader may change the leverage from time to time, and from coin to coin.
6.4 Fixed ratio or fixed amount?
Fixed ratio if not specifically mentioned.
6.5 Should I close positions by myself?
If you turn up the leverage and having a accurate sence of trend, taking 5x by default and 7x leverage set, if things ain't going right, you can close 28% of the position, removing the leverage(10 × 7/5 × 0.72 = 10.08). If you are new to crypto, simply don't do anything.
6.6 Tricks to copy a portfolio?
Wait until it has drawdown, focus on noon and afternoon in Friday.
7. Suggestions:
7.1 Don't borrow money
Those who are new to copy trading may think it's a oneway bet. Taking user Krewetka as example, he borrowed money to copy trading, his message sent in the chat room changes from "every copy leader is holding long for good" to "all copy traders are frauds". I don't mean to mock at this, instead, he can discourage those who want to borrow money using his own experience.
7.2 BN introduces maximum floating loss
Taking the FTMO challenge as example, the result of all closed positions in sum with the currently open floating P/Ls (profits/losses) must not hit the determined daily loss limit(5%). But in copy trading even if the floating loss comes to 90%, but if it recovers in a day, the maximum drawback won't show anything. "Max Drawdown" in BN can't reflect the actual ability of copy leaders. Since copy traders can only open/close positions at market price, the platform doesn't need to take care about the losses of them. But if by any chance, BN hopes copy trading is profitable for copy traders, please add the "maximum floating loss" index.
7.3 BN notifies minimum margin
Calculating manually needs checking the position history, it would be nice if BN can do this for copy traders.
7.4 BN implements auto hosting
Manually adding margin or removing profit requires copy leaders to take care of positions opened, if BN can make it automatic, it would be more profitable for copy traders.
8. Others
8.1 Who did I copy?
1. 383bd, my copy was closed by system though. 2. huigege, there're some drawdowns reasontly. I'm not recommending, just stating facts.
8.2 How much did I earn?
Datas are collected on 2025/3/9, this article is completely written by a human, please link back to this page on reposting. I'm not an alt account and I don't have plans to be a copy leader.
#Copytrading #copytrade #CopyTradingDiscover #CopyTradingRevolution #CopytradingSuccess