How Copy Trading Works and What Risks to Know

Copy trading lets you follow another trader automatically. When that trader opens a trade, the same trade opens on your account. The setup takes a few clicks. The hard part is the thinking: whom to copy, how much to risk, and when to stop.

This guide explains how copy trading works at Bitvyl. It also explains the real risks, with simple examples. Copy trading is not a way to earn without risk. You can still lose money, and you are still responsible for every trade on your account.

How copy trading works at Bitvyl

At Bitvyl, copy trading is in the Social Trading section. There you see a ranking of traders, sorted by profit. You can view the ranking for the last 24 hours, 7 days or 30 days. A trader needs at least 3 trades in that period to appear. For each trader, you can see the number of trades and the win percentage.

To start copying:

1. Open Social Trading and choose a period.
2. Open a trader's profile and study the results.
3. Set a fixed amount per trade.
4. Choose the account: demo or real.
5. Press "Copy".

From that moment, each new trade of that trader opens on your account. The copy uses the same asset, the same direction (Buy or Sell) and the same expiration. Only the amount is different. It is the fixed amount you chose, not the trader's amount.

You can pause or stop copying at any time. After that, new trades from that trader are not copied. You can copy up to 20 traders at the same time.

Sometimes a copy cannot open. For example, your balance may be too low, or the trade may be above a limit. When this happens, you receive a notification. Read these notices. A missed copy means your results will be different from the trader's results.

You can find a short overview on the copy trading page.

Past results do not predict future results

A ranking shows what happened. It does not show what will happen. A trader at the top this week can be at the bottom next week. Three problems make rankings look better than they really are.

Small samples

Look at two traders:

• Trader A: 3 trades, 3 wins, 100% win rate.
• Trader B: 250 trades, 58% win rate.

Trader A looks better. But 3 trades tell you almost nothing. A coin can land on heads three times in a row. That does not make the coin special. Trader B has a much longer record, so the number means more.

Also remember the payout. If the payout is 85%, a win gives you US$ 0.85 for each US$ 1, and a loss takes the full US$ 1. So you need to win about 54% of trades just to break even. A win rate that looks good can still lose money. Our guide to risk management and position sizing explains this math in more detail.

Survivorship bias

The ranking shows the traders who did well in the period. It does not show the many traders who took the same kind of risk and lost. Those traders are not at the top, so you do not see them.

This creates a false picture. A trader who uses very large amounts and very risky trades can reach the top by luck. When you look only at the winners, risky behaviour can look like skill.

Streaks

Winning streaks and losing streaks are normal in trading. A trader can win 10 trades in a row and then lose 10 in a row. If you start copying at the end of a good streak, you may copy only the bad part.

Compare the 24-hour, 7-day and 30-day views. A trader who appears only in the 24-hour view may simply be having a lucky day. A trader who appears in all three views is more interesting. Even then, it is not a promise.

How to choose whom to copy

There is no perfect method. But these questions help you avoid the worst choices:

• How many trades? Prefer a long record over a short one.
• Is the trader stable across periods? Check all three views, not only the best one.
• How often does the trader trade? If a trader opens 50 trades a day, your fixed amount is used 50 times a day.
• Which assets and expirations? If you do not understand the style, for example very short trades of a few seconds, you will not know when something is wrong.
• Does the win rate fit the payout? A win rate close to the break-even level leaves little room for error.

Control your risk

You cannot control the trader you copy. You can control how much you risk, how many traders you follow and when you stop.

Use a small fixed amount per trade

The fixed amount is your main risk control. Choose it before you look at the profits.

Here is an example. Your balance is US$ 200. You decide to risk 1% per trade, so US$ 2 per trade. You copy two traders. Each one opens about 15 trades a day. That is around 30 trades a day on your account.

Now imagine a bad day with 10 losses in a row. At US$ 2 per trade, you lose US$ 20, which is 10% of your balance. That hurts, but you can continue. At US$ 20 per trade, the same 10 losses cost US$ 200. Your balance is gone.

The minimum trade is US$ 1, so even a small balance can use a careful amount.

Diversify, but keep it simple

Copying two to four traders with different styles can reduce the effect of one bad trader. But more is not always better. If you copy 15 traders, you cannot follow what each one does. Your total number of trades also grows fast.

Also check if your traders really are different. If they all trade the same asset in the same direction at the same time, you have the same risk several times. That is not diversification.

Pause, review and stop

Set your rules before you start, when you are calm. For example:

• Pause a trader if your copied trades from that trader lose more than a set amount, such as US$ 20.
• Review each trader once a week.
• Stop copying if the trader suddenly changes style, for example much more trades per day.

Write down why you started copying each trader. When you review, compare the reason with what really happened. Our article on trading psychology explains why written rules work better than decisions made in the moment.

Start in the demo account

When you set up a copy, you can choose the demo account. The demo has US$ 50,000 in virtual funds with no monetary value. It uses the same quotes and tools as the real account.

Copy two or three traders in demo for a week or two. Watch how the results change day by day. Check how many trades open and how your balance moves. If you need help with the demo, read how to use a demo account.

Key takeaways

• Copy trading opens the same asset, direction and expiration on your account, with your own fixed amount.
• Rankings can mislead because of small samples, survivorship bias and streaks.
• Prefer traders with long records who are stable across 24 hours, 7 days and 30 days.
• Keep the fixed amount small, for example 1% to 2% of your balance.
• Diversify with a few different traders, and set pause rules before you start.
• Past results do not guarantee future results.

Trading involves high risk, and you can lose all the money you invest. Only trade money you can afford to lose. The safest first step is to test copy trading with virtual money. Open your free demo account and copy a few traders in demo before you use real funds.