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Truth about Copy trading

  • #1
  • First Post: Sep 27, 2020 3:58pm Sep 27, 2020 3:58pm
Last few months I am following OctFx copy trading platform. I have a few observations.

1. Number one master account always loss the complete balance within one month.
2. within 1 or 2 months some traders turn 50$ to more than 10000$ and lose it all.

here is one I have taken screen short recently he lost all his balance. Although he doesn't become the number one trader, but he makes 5o$ to 12000$ within just 2 or 3 months of active trading. Now he lost all his money.

He started another account but he could not make a profit from that account now. I mean he lost his confidence.

I have seen over and over and over people are making a large sum of money trading and loss all.

Now comes to copy trading, most of the copy trading platform shows nice profitable traders, once you start copying their trade you will make some money for a few months after that they will lose their balance and you will lose your balance too. one of the best copy trading platform is MQL4, those who are number one traders 1 year ago now they are not in this platform. do you know why? because they lose money. OctaFX or other broker's copy-trading platform is worse than you can imagine.

Now Question is can we make a profit by copying other traders or any Algo system. what you think?
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MA provides the market's current direction and strength.
  • #2
  • Sep 28, 2020 3:14am Sep 28, 2020 3:14am
Quoting hasib
Last few months I am following OctFx copy trading platform. I have a few observations. 1. Number one master account always loss the complete balance within one month. 2. within 1 or 2 months some traders turn 50$ to more than 10000$ and lose it all. here is one I have taken screen short recently he lost all his balance. Although he doesn't become the number one trader, but he makes 5o$ to 12000$ within just 2 or 3 months of active trading. Now he lost all his money. He started another account but he could not make a profit from that account now....
Then follow the long standing accounts building balances slowly and low risk, why follow ones that have such stupid targets and high risk trading in the first place?
  • #3
  • Sep 28, 2020 5:49am Sep 28, 2020 5:49am
Copy trading could work in theory, but it's not as simple as most people think. The brokers and the platform providers want you to believe that it's easy because they simply want to take your money.

First of all, you need a platform where you can really copy the trades 1:1 without slippage and delays. This by itself is almost impossible due to technical reasons.

But if we ignore the first problem or say you find a way to solve it, then the way to make copy trading work is to use diversification and external risk management.
You need relatively large account for a start because you have to copy as many signals as possible on the same account.
For each strategy you have to estimate the expected risk/return, in order to allocate the correct amount of capital in such way that all new signals to trade with the same risk on equal basis.
Then over time you have to replace the failing signals with new signals based on performance metrics. You allocate more capital to the best performing signals and reduce the capital for the failing ones. You have to do this constantly on automated basis. You have to build special robot to manage all of trades for the different signals and the capital allocations in real time based on predetermined formulas.
  • #4
  • Sep 28, 2020 10:09pm Sep 28, 2020 10:09pm
Quoting hasib
Last few months I am following OctFx copy trading platform. I have a few observations. 1. Number one master account always loss the complete balance within one month. 2. within 1 or 2 months some traders turn 50$ to more than 10000$ and lose it all. here is one I have taken screen short recently he lost all his balance. ... what you think? {image} {image} {image}
In the first sight of copying trades showing good performance, I'm surprised and exited that the brokers build such good platforms to help rookies earn money easier. Then immediately there's an alert blinking in my mind, why are they supposed to be so kind and helpful? Why are there not as many people copying the good trades as expected? Now I got the answer from your post, and you are the actual good one to remind us.
  • #5
  • Sep 29, 2020 6:58am Sep 29, 2020 6:58am
In Octafx master trader list, he is now the number 2 trader. He invested only $273. Today is the 100th days of his trading in that account his balance is now $45 196.25. I wish I could tell him that he should withdraw at list 50% of the account, I wish he listens to me. once he will start losing he will lose all of this account. Although he is not a new trader he trades forex from 2006 and he withdraws around 1600$+. In the previous observations, I have seen so many traders lose their accounts after this kind of big gain.

when he will lose his balance, all copy traders also will their balance but he already with his initial deposit and more.
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MA provides the market's current direction and strength.
  • #6
  • Oct 1, 2020 12:27am Oct 1, 2020 12:27am
As I said earlier These top traders make a larger amount of money very quickly and Lose their money even more quickly. see this trader in a floating loss of 29000$+.
I am sure you will lose his account and all the copy traders also lose their balance too. If not this time within a short time. There are 275 traders copying his trade. now all of them will lose their balance. those who newly join they are in more trouble.
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MA provides the market's current direction and strength.
  • #7
  • Oct 1, 2020 7:22am Oct 1, 2020 7:22am
Forex is hard but greed and fear make it more difficult.
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MA provides the market's current direction and strength.
  • #8
  • Oct 1, 2020 7:42am Oct 1, 2020 7:42am
I have drawn 3 lines in GJ Daily chart one of them is the right to support and resistance line. Maybe both of 3 is is right or 2 is right I am not going for that debate. what I want to tell you is S&R doesn't work in real-time, Yes it is work very nicely after every move is happening and in historical data. some guru will come and tell you that s&R is not S&R it is Zones. By making a zone they think they can increase the probability of selling their course. Those who are observing the market or trading the market and good student of the market for a long time they know S&R has no meaning at all.
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MA provides the market's current direction and strength.
  • #9
  • Oct 1, 2020 8:36am Oct 1, 2020 8:36am
The problem with these copy traders is they trade purely based on luck, when they profit from trending markets they think of themselves as experts and start over leveraging and loose all they had earned by sheer luck. Most of copiers are newbies attracted towards high gains but most of them are not lucky enough to withdraw those gains.

below is an SS from this guy's telegram group.

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  • #10
  • Oct 1, 2020 9:14am Oct 1, 2020 9:14am
Quoting xs2me
The problem with these copy traders is they trade purely based on luck, when they profit from trending markets they think of themselves as experts and start over leveraging and loose all they had earned by sheer luck. Most of copiers are newbies attracted towards high gains but most of them are not lucky enough to withdraw those gains. below is an SS from this guy's telegram group. {image}
Your right! I have found his Trading journal in FF - He doesn't follow his Trading rules I have Closely observe it. He makes money without following his rules and now he loses his money without following these trading rules too. I don't know others I have personally learned many things from his mistake and his success.

Here are his FF Trading journal rules --

This journal is intended to record all my fx trading activities. I have been trading quite some time, however never recorded.

I will concentrate on one pair which is the GBPJPY as my favorite pair. I will trade in mixed style intraday and swing trading.

Trading Plan:
1. Refer multi-time frames start from Daily-M1.
2. Check the main trend at Daily and H4 TF.
3. If the price or CS above SMA10 (H4 TF), trend is up and find an opportunity to buy.
4. If the price or CS below SMA10 (H4 TF), trend is down and find an opportunity to sell.
5. Analysis price momentum to identify strong and weakness of the market.
6. Using MACD to identify divergence for potential market reverse.
7. Using BB as well to identify market is trending or sideway.

Money management:
1. Position sizing margin level around 1000% for account leverage 1:500.

Risk management:
1. Risk reward ratio at least 1:2.
2. Cut loss quickly if positions are wrong.

Goal/Target:
1. Gain 100%/month as a base target.
2. To be consistent every month.

Emotion/Psychology:
1. Keep calm and patience.
2. Avoid angry.
3. Accept loss and accept when I am wrong.
4. Remain discipline

Will start to post when the markets open next Monday.
All my detailed activities can be referred to my trade explorer.
MA provides the market's current direction and strength.
  • #11
  • Oct 1, 2020 11:37am Oct 1, 2020 11:37am
Quoting hasib
Forex is hard but greed and fear make it more difficult. {image} {image} {image}
cannot blame the guy completely tbh, GBP pairs are being erratic presently because of BREXIT, should avoid GBP at all costs or trade very cautiously, much more than usual. having high leverage with GBP pairs presently esp is being suicidal.

regards
  • #12
  • Oct 13, 2020 5:41am Oct 13, 2020 5:41am
Yes, guys - the majority of traders lose their money (especially newbies). That's why I'm currently thinking about reverse copying. My logic is that if over 90% of traders lose their money, then if I copy their reverse orders - I will win

I know that several copy trade software have this feature (forexcopier, trade-copier etc.) - did anyone try it?

Here is the details of how it may work:

  1. “Bad trader” (for example, some newbie or some “lossy EA”) is opening a BUY order.
  2. Copier takes a signal and converts it to the opposite type of order (BUY -> SELL), so I receive SELL order
  3. The price is falling so original BUY order is in loss and the bad trader starts to panic. At the same time, the SELL order in my account is in Profit.
  4. “Bad trader” closes the order. Unfortunately, he lost some money.
  5. I make profit

What do you think?

  • #13
  • Oct 13, 2020 9:37am Oct 13, 2020 9:37am
Quoting JeffreyBa
................ What do you think?
You have to study the math a bit more! It's not as simple as you think.

You can reverse a losing strategy to make it profitable only if the negative expectancy of that strategy is at least 3 times larger than friction cost.
And there is still no guarantee that it will work. There are many unknown factors in regards to trade execution and slippage.

To find a really strong losing strategy is just as hard as to find strong winning strategy.

Another problem is that even if you find such strategy, the life expectancy will be very short and you will have to replace the signals very often.
The original signals will lose money quickly and trading will stop. You will have to find another one.
  • #14
  • Oct 13, 2020 1:01pm Oct 13, 2020 1:01pm
A long time ago I used to offer signals (some were copied, some were real-time) based on a combination of carefully chosen adaptive strategies...

Long story short. Barely 1%!! of my clients followed my precisely developed money management, and every trade, Which as I had clearly stated, absolutely needed to be followed with these rules.

Horrible story short : death threats, major losses...

Just because it did around 5% profit a month with only 2-3% dd, people ignored my rules and without realising what they were doing, imagining they could simply do, blindly : 3% dd * 10 (some risked much more!), they thought, I can take that ! Without realising that this is not simple math. Take out any aspect of such money management without knowing what you are playing with and thats what you get...

but none listen....

Too many need the holy grail or nothing.... and gamble blindly.

Don't ask me about it.

P.S if your going to copy, diversify.
If you re going to copy.
Don't use funds you can't afford to lose.
If you re going to copy, follow the rules given to you by the trader 100%.
If you re going to copy, may it be from a proven record of the most years +10 and the most trades +1000. proving he knows to adapt fast enough to survive the forever changing movements and conditions.
If I don't mention SL and/or TP = longer-term setup possibly in the works!
  • #15
  • Oct 14, 2020 1:53am Oct 14, 2020 1:53am
One of the biggest advantages of copy trading for beginners is that it allows new traders to start investing even if they have limited knowledge of trading and how the markets work. If you're new to trading, it may be difficult to understand the challenges and pitfalls you should avoid and understand market behavior.
  • #16
  • Nov 6, 2020 7:05pm Nov 6, 2020 7:05pm
Quoting Butterscotch
One of the biggest advantages of copy trading for beginners is that it allows new traders to start investing even if they have limited knowledge of trading and how the markets work. If you're new to trading, it may be difficult to understand the challenges and pitfalls you should avoid and understand market behavior.
Actually the opposite is true. You can't tell if a trader is worth copying or not unless you have decent knowledge to begin with. I've gone through thousands of traders and signal providers, and so far only invested in 2. Really shows that it's true that only a handful of traders are successful.
  • #17
  • Nov 7, 2020 7:14am Nov 7, 2020 7:14am
Quoting zenkh
{quote} Actually the opposite is true. You can't tell if a trader is worth copying or not unless you have decent knowledge to begin with. I've gone through thousands of traders and signal providers, and so far only invested in 2. Really shows that it's true that only a handful of traders are successful.
Copy trading does not work in the way it is done on all these web platforms.
The brokers made these platforms to generate volume and to rob the retailers with slippage. These platforms are not made for us to make money.

Copy trading can work if done with the right tech and suitable mid-long term strategy.
  • #18
  • Nov 7, 2020 8:27am Nov 7, 2020 8:27am
Quoting JamesSmithFX
{quote} Copy trading does not work in the way it is done on all these web platforms. The brokers made these platforms to generate volume and to rob the retailers with slippage. These platforms are not made for us to make money. Copy trading can work if done with the right tech and suitable mid-long term strategy.
I've been following (autocopy) a scalper with some success, but only because we're on the same platform, using the same broker and the same account type. Even if it's mid-long term strategies I still dont think it's wise to copy someone who trades with a different broker. As you said, slippage alone is enough to kill any strategy, let alone the difference in prices under different liquidity providers.

So far out of the thousands of traders I've sifted through I've found that 100% +/- return per year is about as safe as it can get without ridiculously high risk of account blowing up. Any ROI that shows thousands of % of return will blow up at some point, but some are worth the short term gamble if it meets a few criteria (e.g. no massive floating losses). Even martingale can be a legit strategy if profits are regularly withdrawn before the account blows up.

The chances of success with copy trading is probably no different from trading ourselves (slim). It all comes down to stacking the odds in our favour through adequate education.
  • #19
  • Nov 7, 2020 8:49am Nov 7, 2020 8:49am
Question:

Aren't some of these top10 traders actually fake? It would make perfect sense from MM pov to suck new traders based on "previous results" only to have them lose it all.
  • #20
  • Nov 7, 2020 11:58am Nov 7, 2020 11:58am
Quoting mades
Question: Aren't some of these top10 traders actually fake? It would make perfect sense from MM pov to suck new traders based on "previous results" only to have them lose it all.
You're not wrong. They mostly are. But it's easy to spot once you know the game. The same pattern repeats itself endlessly. They would create multiple accounts with minimum deposit ($50 to $100) and trade with unsustainable lotsize, keep the accounts that are lucky enough to make a few thousand % profit in a short period of time, get followers, blow up the account, then rinse and repeat. Or, not closing out losing positions to inflate the balance growth %. Those who are none the wiser wouldn't even know to look at the floating P&L. In fact some platforms don't even allow you to see the open trades.

That's not to say that it's in their interest to lose all your money though. The longer it lasts the more lucrative it is for them. The best case scenario would be a win-win for both parties. It's still possible to make money off these swindlers though, you just need to know how much to put in and when to pull out. Not so different from coming up with an entry and exit plan with positive expectancy.
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