Copy trading is a popular strategy for investors of all experience levels. It simplifies the process of participating in financial markets by allowing users to automatically replicate the trades of expert investors. This guide answers the most common questions about how it works.
What Is Copy Trading?
Copy trading is a form of social investing and a powerful portfolio management tool. It allows everyday investors to automatically copy the exact trade entries and exits of experienced traders. When the copied trader executes a trade, it is automatically replicated in the follower’s account, enabling them to potentially earn profits without needing to make independent trading decisions.
Supported and Restricted Regions
While copy trading is accessible globally, it is not available in all jurisdictions due to local regulations. The service is currently restricted for users residing in or citizens of: Hong Kong, Singapore, Cuba, Iran, North Korea, Crimea, Malaysia, Syria, the United States, Canada, the United Kingdom, Bangladesh, Bolivia, and Malta. Users should always check their local laws before participating.
Understanding the Fees Involved
The fee structure for copy trading is straightforward. You will pay the same trading fees and funding rates that apply to standard contracts on the platform. There are no additional hidden charges or separate fees specifically for the copy trading service itself.
How Profit Sharing Works
Successful traders who share their strategies often receive a share of the profits they generate for their followers. This profit-sharing rate is set by the trader.
For example: If Trader A has a profit-sharing rate of 10% and you generate 100 USDT in profit from copying them, Trader A would earn 10 USDT (100 * 10%) as a performance fee. Your net profit would be 90 USDT.
Account Types and Fund Placement
Can Sub-Accounts Use Copy Trading?
Yes, sub-accounts are fully enabled to participate in copy trading activities.
Where Should I Place My Funds?
To begin copy trading, you must ensure your funds are available in your trading account. This is the account from which margin for the copied trades will be allocated.
Supported Markets and Instruments
The range of assets available for copy trading is extensive and typically mirrors the contracts available for regular trading on the platform. For the most current and detailed list of all supported trading pairs and instruments, always refer to the official platform documentation.
Order Execution and Price Limits
There are no special price restrictions for orders placed through copy trading. Trades are executed under the same market conditions and price rules as standard contract trading.
Limits on the Number of Traders You Can Follow
The platform has controls to ensure responsible risk management:
- One-Way Position Mode: You may follow a maximum of 1 trader.
- Two-Way (Hedging) Position Mode: You may follow up to 10 traders simultaneously.
Common Reasons for Copy Failure
A copy trade can fail for several reasons. You will typically receive an email or in-site notification if this occurs. Common reasons include:
- The lead trader has quit or had their trading leader status revoked.
- The lead trader has reached their maximum follower capacity.
- The lead trader has triggered a risk control limitation.
- Your trading account has insufficient available assets.
- The opening price for your copy trade exceeded the allowed price slippage protection.
- You have reached your maximum allocated copy trading amount.
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How to Cancel a Copy Trading Arrangement
The process for stopping your copy of a specific trader is simple and can be done at any time. For precise, step-by-step instructions on how to cancel, please consult the official help center or FAQ section within the platform's interface.
Price Slippage Protection Explained
To protect followers from poor order execution, the system includes a 0.5% price slippage protection on trade entries. If the price at which your order would execute is more than 0.5% worse than the price at which the lead trader entered, your copy trade for that specific position will not be executed and will fail. This prevents you from entering a trade at an unfairly disadvantaged price.
What Is the "Maximum Copy Amount"?
This is a personal risk management setting. The Maximum Copy Amount is the total sum of margin you are willing to allocate across all your active copied trades.
Example: If you set your "per-trade amount" to 100 USDT and your "maximum copy amount" to 1,000 USDT, the system will stop opening new copy trades after you have 10 active positions (10 * 100 USDT = 1,000 USDT). Even if the trader you are following opens new positions, you will not copy them once your total allocated margin reaches this ceiling.
Daily Order Limit for Lead Traders
To maintain system stability and quality, lead traders are subject to a daily order limit. A trading leader can have a maximum of 500 orders copied by their followers per day. If this limit is exceeded, the trader can continue to place their own trades, but those additional trades will not be copied by any followers.
Reasons a Lead Trade Might Fail
A lead trader can also encounter issues when attempting to open a position for others to copy. They will be notified via email or站内信 (site mail). Common reasons include:
- The lead trader's account balance falls below the required minimum (e.g., <500 USDT).
- The lead trader has exceeded the daily 500-trade limit for copy eligibility.
- The new trade would cause the trader's total position value for a specific asset to exceed the allowed limit.
Partial Closing and Order Types for Traders
Can a Trader Use Limit Orders to Close?
Currently, while traders can open positions using limit orders, the functionality to close those copied positions is more restricted. To close a position that is being copied, a lead trader must use a market order through the dedicated "Lead Trading Management" page.
Can Positions Be Closed in Parts?
Yes, lead traders have flexibility. They can choose to close a specific order entirely or can opt for a partial close by specifying the amount they wish to close via a market order. They can also choose to close their entire position for a specific asset all at once.
Leverage and Position Value Limits for Lead Traders
Lead traders are subject to specific leverage caps and maximum position values for each trading pair they choose to lead with. These limits are in place to manage risk for both the trader and their followers. For the exact, up-to-date limits on each asset, it is essential to review the official specifications provided on the platform.
Frequently Asked Questions
Q: Is copy trading suitable for beginners?
A: Absolutely. It is designed to allow beginners to participate in markets by leveraging the expertise of seasoned traders. However, it is crucial to understand that all trading involves risk, and past performance is not indicative of future results.
Q: How do I choose a good trader to copy?
A: Look for traders with a consistent long-term performance history, a risk profile that matches your own tolerance, and a transparent trading strategy. Avoid those with extremely high but volatile returns.
Q: Can I lose money with copy trading?
A: Yes. Copy trading does not guarantee profits. If the trader you are copying experiences losses, those losses will be automatically replicated in your account. It is important to only risk capital you are prepared to lose.
Q: What is the difference between copy trading and a mirror trading bot?
A: Copy trading specifically replicates the actions of a chosen human trader. A mirror trading bot typically follows a pre-defined algorithm or strategy rather than a specific individual's discretionary decisions.
Q: How much control do I have over my copied trades?
A: You maintain full control over your capital. You can set risk parameters like stop-loss orders, define your investment per trade, and unfollow a trader at any time to stop future trades from being copied.
Q: Are the profits I keep after profit-sharing subject to taxes?
A: Tax treatment of trading profits varies greatly by country and jurisdiction. It is your responsibility to consult with a local tax professional to understand your reporting obligations.