Copy Trading is not a "set and forget" strategy. It requires research and active management.
1. Define your Strategy and Risk
Know your Risk Appetite: Before copying, determine how much capital you are willing to risk (the amount of investment in copy trading). Do not copy with money you cannot afford to lose.
Set a Global Loss Limit: Use the Stop-Loss or Take-Profit function in your copy settings. For example, if the trader you follow loses 20% of your copied capital, the system should automatically stop the copy.
2. Diversify and Do Not Put All Your Eggs in One Basket
Follow Multiple Traders: Do not rely on a single trader. Divide your copy trading capital among 2 or 3 traders with different styles (scalping, swing, etc.) or assets. This mitigates risk if one of them has a losing streak.
Review Periodically: Past performance does not guarantee future results. Review the performance of your copied traders at least once a week.
3. Maintain Control (Do Not Blindly Trust)
Understand the Fees: Remember that a part of the profits (generally around 10% on Binance) goes to the main trader. Ensure that the remaining profits justify the risk.
Learn from the Trades: Observe why and when the trader opens and closes positions. Use copy trading as an educational tool, not just as a source of passive income.
🕵️♀️ How to Identify and Follow the Best Traders
The trick is to go beyond the highest ROI (Return on Investment).
Key Indicator
Why It Is Important
Signals to Copy
Signals to Avoid
Duration of the Strategy
A high ROI but recent (last 7 days) may be luck. A long history (more than 90 days) shows consistency.
History of over 3 months with consistent profits.
ROI of 500% in 7 days, but prior to that 3 months of losses.
Maximum Drawdown (Max. Drawdown)
Indicates the worst loss the trader has experienced. Measures their risk management.
Max. Drawdown below 30%. Shows prudent management.
Drawdown above 50% or 60%. Excessive risk.
Trading Frequency
A trader who trades too much (Scalper) can be risky. One who trades too little (camouflaged HODLer) is not ideal for copy.
Win Rate of 55% to 70%. Shows a balanced strategy.
Win Rate of 95% but with only 10 trades in 3 months (not enough data).
Assets Under Management (AUM)
Reflects the confidence of other users.
✅ Quick Summary for Success
Set Stop-Loss/Take-Profit in your copy settings.
Do not copy the highest ROI; copy the consistency and the lowest maximum drawdown.
Diversify your capital among several prudent traders.
Review and adjust your selection weekly.
Copy Trading can be a powerful tool if approached with discipline and research. Comment on how it has gone for you in copy trading and share your experience. Happy trading!
#Copytrading #BinanceSquare #GestiónDeRiesgo #Criptomonedas
