Replicating trades of profitable traders' theoretical questions

I will be glad to hear your different opinions on the topic. Lets suppose that there are some traders over the world that have really profitable strategies, so they are trading with very high returns. Those traders surely must be using some form of a broker so to access the market. That broker has the info for any open trades etc of all the accounts with that particular broker. So what does actually stop the broker or other broker employes (trading their personal accounts somewhere) to just copy the trades of any of their most profitable traders. How does that loophole get fixed? Also, lets bring a second topic here. Do you think that other people replicating the trades will reduce the expectancy of profit (destroy the inefficiency in some others language) or do you think it can actually increase it. For the example we will assume that the profitable traders enter with large size and their trades are not internally matched within the broker so they are actually passed to the liquidity providers. We will also asume that the net effect is large enough to impact the market, lets not get into discussions if retailers can move the market or not. I am talking about the net effect. I tried to make it as clear as possible lol

This is quite common actually in many ways shapes and forms, where traders are copied, and/or trading signals are provided.

A couple examples: PAMM accounts are one way. And there are prop firms that also selective copy the trades of their clients. Plus signal providers. Etc.

Forex is not centralized, the volume is spread across many brokers.

So any trade copying if/when it is done is all just part of order flow/liquidity in forex.

But institutions are what moves the market with “smart money” for example just like they did it on Friday…

Clear as possible: copy-trading is bullshit and fake. If trader is so profitable there is no need to have followers.

I would tend to agree with this… relatively easy to replicate a successful system but hard to have the same mindset, degree of risk etc. as it’s author.

I know of a prop firm that uses algorithms to selectively copy trades from their clients to manage risk.

But the point of the question wasn’t really “should I copy trades”? Or “does copying trades work”?

The question was, what affect it has on the market, which imo does not affect the market at all and just gets absorbed in the order flow liquidity.

Edit: not to mention with PAMM accounts, it is also automated. There is only the decision on what traders to copy. It is done automatically and someone with zero trading experience can sign up to have their money traded by 1 or more traders automatically.

- profitable trader and the broker knows everything?
Ideally, the broker only knows your entry and may be surprised by your exit if SL and tp are hidden orders.
- other traders are replicating your trades and your profit is lower?
This is conceivable with very large lot sizes and a small broker if the broker increases the spread above your desired liquidity limit.
- To influence the market you need to be called Elon Musk and throw proper weights in the unregulated market (e.g. BTC).
Otherwise only a mosquito is on the way, no elephant.

What's wrong with you putting me on the ignore list? Isn't there a way to openly discuss here?

What is wrong with me? So many things wrong with me I don’t know where to begin.
But not sure it relates to the topic here…

Also I assume a stranger putting you on ignore on a public forum bothers you.
And you assume that me putting you on ignore means something is wrong with me.

I think one of us or both of us are assuming wrong. Or maybe we are both right?

How about we start over. I will take you off ignore….

nothing to stop them at all and some buckets definitely do this, although I'd be surprised if bigger ECNS do it only because regulation is tighter. And yes all this does impact profitability.

Deal size on interbank is a *lot* smaller than people think - typically between $1m (min trade size) to $3m. That's 10-30 standard lots - up to $300/dollars a pip.
Anything bigger gets split into multiple deals - so seeing 20 x $1m in a minute is not unusual from one single venue but the value of the single deal remains small
Given your broker is not tier 1, they'll be plugged into 1 or 2 venues, but if they exceed $3m at a time, they, and therefore you will get delays and/or slipped, without question.

So working back from this - copy traders; depends if the trades are routed through one broker or multiple. If multiple, probably no difference. If single, depends on who has order preference; if you can execute in advance, the slippage will be to your followers; if collected together, you'll all get worked.
Prop shops - depends on how much they leverage your trades. Back of a fag packet, anyone offering 90% of profits I'd expect to be multiplying your trade by 4 to 5 times to make the business viable so this limits the max account size they can offer to $1-$2m.

If you're on a proper ECN and using PAMM accounts for your customers, you can use loads of different order algos to eliminate these problems so nothing's insurmountable. But the short version - there's always a ceiling on bucketshops re trade size because they're not set up to handle large single orders.