Copy trading platforms are extremely popular due to the ease of use of the automatic system that copies the trades of experts.
This success, however, is overshadowed by the numerous negative online comments. As a result, it is reasonable to ask, "Do you really earn money with these platforms?"
How to Lose Money When Using the Copy Trader Platform
I can't give you an exact answer, but I'm sure the majority of traders lose money.
How do I know this?
Since 2016, I've been promoting several brokers, and the statistics in my affiliate program control panel show that:
► Approximately 45% of new traders who open a real account stop trading within a week.
► Approximately 25% quit within a month.
► Approximately 10% quit within six months.
► Only 20% of traders are still investing.
I have serious doubts that 20% will match the number of winning traders. Why?
Still comparing affiliate program statistics, some traders who continue to deposit funds with some regularity. So, if a trader is profitable, I suppose it is pointless for him to continue depositing.
Obviously, these are just hypotheses, because I can't see how much a trader earns or loses on the control panel.
In this analysis, I'd like to play devil's advocate by assuming that only 10% of investors actually profit.
But now I'm curious about how this 10% makes money!
Look for mistakes made by copiers.
I started a discussion with 100 people who complained in British and especially foreign forums to understand their flop.
Aside from two respondents who spoke negatively about a popular broker, I discovered from this survey that:
► All dissatisfied traders have used the copy trading platforms at least once, but none have used the program for more than ten days.
► They all began with small amounts of money. more specifically (rounded amounts).
► 82 started with a capital of 200 €/$, 7 with 250 €/$, 4 with 300 €/$, 3 with 400 €/$, and 4 with 500 €/$.
► All 100 have never planned to diversify their investments.
► 84 traders entered the markets with no intention of determining the best times to trade, consulting an economic calendar, or gathering economic news.
► At most two "experts" have been copied by 76 traders.
► 61 traders have only invested in a single currency pair or financial asset.
► 48 traders have redeposited, paying a maximum of 50 to 200 euros.
► 27 traders exited the platform before even seeing the results of their trades.
► Nobody has ever talked to the trader they were impersonating.
That's terrible! I am not surprised that 90% of those polled lose money.
Given the fact that trading is not a secure investment, To make money with copy trading platforms, you must do the exact opposite of what these 100 investors did.
Even if learning how to use it only takes 5 minutes. It is critical to study it in stages.
► Trading, simulating real-world markets.
► Experiment with issuing stop orders (authentic parachute). The traders you emulate are human beings who make errors.
► Market intervention (especially in real life). You can change orders and log out at any time with copy trading programs.
► Choose carefully who to imitate.
Each trader you copy has a personal card that contains information about his trades and characteristics.
The program displays the ranking of the best traders by asset category; however, this ranking is skewed due to the trader's popularity.
In fact, the platform does highlight the best traders in the top positions, but they are also the ones who interact the most with the community.
The first traders you'll come across are those who publish multiple posts and frequently participate in social trading discussions.
Your objective is to find at least five traders, each specializing in a different currency pair or financial asset and having a different risk appetite.
Each trader's investment capital must also be diverse. While it is incorrect to distribute the same amount to each trader you copy,
An Investment Diversification Example
► Invest 100 euros in Trader 1, which specializes in the EUR/USD exchange and operates with 1:100 leverage at low risk, with gains ranging from 10 to 20%.
► Invest 50 euros in Trader 2, a Litecoin specialist, with a leverage of 1:200 and a high risk.
► Trader 3, gold specialist, low leverage, high payout ratio, 80 euros invested
► A Trader 4 index specialist receives a 70-euro investment.
► Invest 95 euros in Alibaba shares with Trader 5, a specialist.
(*) You can balance profit and loss by planning your strategy from the demo by selecting five traders with different characteristics.
Plus, even more importantly, no more than 10% was invested in any single trade.
You must choose unwilling traders to increase your profits.
► To the overtrade.
► High leverage.
► Deadly Sins
One flaw with these platforms is that traders earn a commission for each trader who copies them, allowing them to do frenzied scalping. If the trader you are copying makes a string of bad trades, this will have a negative impact on your investment.
Furthermore, if you started with a small deposit, this trade will quickly deplete your account.
This type of trading is very popular, so if you want to make money, you must have an emergency fund on hand.
The second and most important trick to making money with copt trading is to have enough capital to invest.
Again, based on the statistics generated by the affiliate program's control panel, the traders who continue to operate have the most capital. This supports the theory that the greater the capital invested, the greater the likelihood of profit.
In fact, the winning traders account for 10% of the pie. They all deposited more than $1,000.
How much money should be invested and why?
The minimum recommended trading capital for any platform is $1,000. However, these programs are insufficient. Why?
The main issue for those who invest little money in this program is that they risk being forced out of the market right away.
Because you understand this, simply select a single trader who scalps and trades with high leverage, and you can rest assured that you will receive a margin call alert from the broker in less time than you say.
With low capital, your operations are limited to those that require less than the entire amount. Gains and losses are always proportional, but the real issue is that your trading is restricted.
To protect your money, you cannot afford to invest more than 10% of your capital in a single trade.
You have the following advantages by depositing 1200 euros (minimum recommended capital):
If you have 1000 euros to invest (max 10% for each trade) and 200 euros as an emergency fund in case your traders make poor decisions.