CoinTN
Don't understand technical analysis, don't know how to read candlestick charts, have no time to monitor the market, but still want to participate in futures trading to make money? Binance's copy trading feature might be suitable for you. Copy trading allows you to automatically replicate the operations of professional traders. When they open a position, you open a position; when they close a position, you close yours. You can browse all available lead traders for copy trading on the official Binance website. We recommend using the official Binance App to operate copy trading and view traders' real-time performance at any time. Apple phone users should first refer to the iOS installation guide to install the App.
What is Copy Trading
Copy Trading is a feature that allows you to automatically copy the operations of other traders. You choose a trader you favor, click "Copy", and every subsequent trade made by this trader will be automatically executed in your account proportionally.
For example, if you copy a trader and they use 10% of their funds to long BTC, the system will automatically use 10% of your copy trading funds to long BTC. When they take profit and close the position, your position is also automatically closed. You do not need to make any judgments or operations yourself.
The core advantage of copy trading is that it lowers the barrier to entry for trading. You do not need to have extensive trading experience, you just need to choose the right trader. Of course, "choosing the right trader" is an art in itself.
How to Start Copy Trading
Step 1: Find the Copy Trading Entrance
On the Binance App, click the "Trade" tab, and then find the "Copy Trading" entrance. You can also find it in the features list on the home page.
Step 2: Browse the Trader List
After entering the copy trading page, you will see a trader leaderboard. Each trader's profile displays key data such as their ROI (Return on Investment), win rate, maximum drawdown, and number of copiers.
You can sort and filter based on conditions like ROI, number of copiers, and stability. Take the time to study this data carefully; do not just copy after a quick glance.
Step 3: Select a Trader
Once you find a trader you are interested in, click to enter their detailed profile page. Here you will find more detailed information: historical return curves, records of each trade, current positions, and a description of their trading style.
Step 4: Set Copy Trading Parameters
After clicking the "Copy" button, you need to set some parameters. This includes the copy amount (how much money you plan to invest in copying this trader), copy mode (fixed amount or proportional), stop-loss settings, etc.
Step 5: Confirm and Start Copying
Confirm all settings and click confirm. Copy trading begins. From then on, every operation by the trader will be automatically executed in your account.
How to Choose Reliable Traders
Selecting a trader is the most important step in copy trading. The following indicators need to be focused on:
Long-Term ROI
Do not just look at the ROI for the last day or two, or one or two weeks. Short-term massive profits might just be good luck. Look at the total ROI over at least 30 days, 60 days, or even 90 days. A trader who makes 50% in one month but loses 40% the next month is less reliable than one who steadily makes 10% a month.
Maximum Drawdown
Maximum drawdown refers to the largest loss drop from the highest point to the lowest point in a trader's account. This data reflects the maximum loss you might face in the worst-case scenario. A smaller drawdown indicates better risk control by the trader. It is recommended to choose traders with a maximum drawdown of less than 20%.
Win Rate and Profit-Loss Ratio
Win rate is the percentage of winning trades out of total trades. The profit-loss ratio is the ratio of the average profit per winning trade to the average loss per losing trade.
Traders with a high win rate but a low profit-loss ratio win often but win small amounts and lose large amounts. Traders with a low win rate but a high profit-loss ratio lose often but make a lot when they win. These two metrics must be combined to be meaningful.
Trading Frequency
Some traders make many trades a day (day trading style), while others may only make a few trades a week (swing trading style). High-frequency traders incur higher fee costs, and as a copier, you will also bear these costs.
Number of Copiers and Assets Under Management (AUM)
A high number of copiers indicates that this trader has gained widespread recognition. However, note that too many copiers may impact the execution effectiveness of the trader's strategy.
Trading Style Description
Many traders write descriptions of their trading styles and strategies. Read these carefully to see if they match your risk preference.
Shape of the Return Curve
An ideal return curve moves steadily upward, rather than being a highly volatile zigzag shape. Massive fluctuations mean high risk, and a sudden huge loss one day could wipe out all previous profits.
Copy Trading Parameter Settings
Copy Amount
The total funds you plan to invest in this copy trading strategy. It is recommended not to put all your funds into copying a single trader; diversifying investments is safer. You can allocate your total copy trading funds across 2 to 3 different traders.
Copy Mode
Fixed Amount Mode: Use a fixed amount for every trade copied, regardless of the proportion of funds the lead trader used. Proportional Mode: Replicate trades based on the proportion of the lead trader's position. For example, if the trader uses 20% of their funds to open a position, you also use 20% of your copy trading funds to open a position.
Proportional Mode better replicates the effectiveness of the trader's strategy, and it is generally recommended to use this mode.
Stop-Loss Settings
You can set a total stop-loss for the entire copy trading portfolio. For example, set it to automatically stop copying and close all positions when the total loss reaches 30% of your copy trading funds.
This stop-loss is your last line of defense. Even if the trader's strategy fails completely, your losses will not exceed this set limit.
Single Trade Limit
You can set a maximum amount for a single trade to prevent the trader from suddenly placing a massive position that exposes your funds to excessive risk.
Risks of Copy Trading
The Trader May Suddenly Perform Poorly
Past performance does not guarantee future results. Traders may suddenly start losing money due to changes in market environments, mindset issues, or other reasons. Therefore, you must regularly monitor the performance of the traders you are copying.
Copy Delay
Although the system tries to replicate the trader's operations synchronously, due to network latency and other reasons, your actual execution price may not be exactly the same as the trader's. In a rapidly fluctuating market, this difference can be quite noticeable.
Slippage and Liquidity
If too many people are copying, everyone buying or selling at the same time may affect the market price, causing slippage. This problem is especially prominent with low-liquidity coins.
Profit Sharing Fees
Traders typically charge a certain percentage of profit sharing from the profits of their copiers, usually 10% to 20%. This means the actual profit you receive will be less than the trader's gross profit.
Management of Copy Trading
After starting to copy trade, you cannot just leave it completely unattended. You should do the following to manage your copy trading:
Regularly check your returns and the trader's performance. If a trader suffers consecutive losses or their strategy clearly changes, consider canceling the copy trade.
Control your total copy trading funds. Do not use the majority of your assets for copy trading. It is recommended to keep copy trading funds within 20% to 30% of your total assets.
Diversify your copy trading. Copy two or three traders with different styles to spread out the risks.
Set a total stop-loss. Even if you trust a trader deeply, you must set a stop-loss baseline to protect yourself.
Frequently Asked Questions
How much money is needed for copy trading?
The minimum amount for Binance copy trading varies depending on the trader and the trading pair, but usually, you can start with just a few dozen USDT. However, if your funds are too small, you may not be able to fully replicate all of the trader's operations. It is recommended to prepare at least 200 to 500 USDT as copy trading funds.
Can I trade manually while copy trading?
Yes. Copy trading and your manual trading are separate. However, be careful not to manually trade and copy trade on the same trading pair at the same time, as this may cause confusion with your positions.
If the trader loses, will I definitely lose too?
Most likely yes, because you are copying their operations. However, due to copy delays and price differences, your actual profit and loss might be slightly different from the trader's. If you have set a total stop-loss, you might get stopped out before the trader stops their loss.
Can I stop copying at any time?
Yes. You can cancel your copy trading at any time. After canceling, you can choose to immediately close all copied positions or choose to keep current positions and manage them manually.
How is the trader's profit sharing calculated?
Traders collect a certain percentage of your profits as a profit share. For example, if a trader sets a 15% profit-sharing ratio, and you make 1000 USDT from copy trading, the trader takes 150 USDT, and you get 850 USDT. No profit share is collected when there is a loss.