Risk management when copying

Past performance is not a promise

Every statistic you see, whether return, win rate or drawdown, describes the past. Market conditions change, and even excellent traders have losing periods. Treat history as evidence of skill, not a guarantee.

Judge risk by drawdown, not return

A strategy showing plus 300% with a 60% maximum drawdown means investors regularly sat through losing more than half their money. Ask yourself honestly whether you could hold through that without panicking out. If not, choose calmer strategies.

Diversify properly

• Split your copy trading funds across several providers with different styles, instruments and timeframes.
• Avoid copying several providers who trade the same instrument the same way. That is one bet, not diversification.

Only allocate what fits your plan

• Invest only money you can afford to put at risk, and keep copy trading as one part of your overall approach.
• Start with a smaller allocation and increase it once the strategy behaves the way its history suggested. You can add funds to an active allocation at any time.

Monitor, do not set and forget

• Review your copied strategies regularly.
• Watch for style changes. Suddenly larger positions, new instruments, or abandoning stop losses are warning signs.
• Use the maximum loss setting on your allocation. Decide in advance what loss level you want out at, set it, and copying stops automatically if that level is reached.