Ever tried copy trading and ended up losing? Maybe you just looked at ROI.
In fact, there are 3 other numbers that are more important!
Let's get to know AUM, MDD, and Sharpe Ratio so you won't get trapped again!
Before choosing a copy trader, it's essential to understand the meaning of these statistics.
🔹 1. AUM (Assets Under Management)
Total funds managed by the trader from all their followers.
A large AUM means many people trust it. But...
➡️ Remember, popular ≠ profit.
🔹 2. ROI (Return on Investment)
Return on the capital invested. ROI 100% = double profit.
But a high ROI can be the result of '1 time luck, 9 times loss.'
➡️ Look at long-term trends, not just peak numbers.
🔹 3. MDD (Maximum Drawdown)
How deep the losses experienced were.
MDD 40%? It means the balance dropped 40% before going back up.
➡️ This is a risk measure that is often overlooked.
🔹 4. Sharpe Ratio
A ratio that measures how well return compensates for risk.
The higher, the more stable and healthy the performance.
➡️ ROI can be high, but if Sharpe is bad, that's a red alarm.
🚀 Conclusion:
Don't just be tempted by ROI numbers.
Also understand MDD and Sharpe Ratio so you don't just follow blindly and end up losing.
Copy trading is a strategy, not speculation.
💬 Do you have an interesting experience with copy trading? Share it in the comments!
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