forex-scalping.com

Copy trading platforms replicate a leader's trades on followers' accounts. The leader opens a position, and the follower's account opens the same one, adjusted for size.

The delay between the two can be a few hundred milliseconds to several seconds. For a leader who trades slow strategies, it doesn't matter. For a scalper being copied, it changes the results. A leader who enters at 1.0850 with a 2 pip target may find followers entering at 1.0851 or 1.0852, losing half the target.

Followers also differ in broker, spread and execution, adding variation in fills. A strategy that is profitable on the leader's account can be marginal or negative on a follower's.

Some platforms try to reduce the problem by prioritizing trade distribution or by routing through the same liquidity provider. Others simply tolerate the delay.

When a leader's results are published, they are for the leader's account. A follower's actual results are often lower, and the gap grows for short-duration strategies.

If evaluating a copy trading option, comparing a follower's real performance with the leader's headline numbers over the same period is the right test. Some platforms show both.

For leaders, high turnover brings follower slippage, which may lead to complaints or cancellations.

Has the gap between a leader's results and a follower's been measured?

I followed a scalper on a copy platform for about two months, mostly out of curiosity, with a small amount I was happy to lose. His published curve was smooth and steady. Mine looked like a cheaper copy of it, with the same shape but noticeably flatter, and some of his small winners turned into small losers on my side.

I exported both trade histories and lined them up. My entries were usually between half a pip and a pip and a half worse, and on his fastest trades, where he was in and out within a minute, I sometimes got the exit before I had even been filled properly. Different broker, wider spread, and the copy delay all stacked on top of each other.

My conclusion was that copying anyone whose target is under ten pips is mostly a donation to the gap. If someone wants to try it, I'd suggest comparing the follower stats, not the leader's, and doing it for at least a month before trusting either.