Copy Trader FAQ
How to become a Copy Trader?
Copy-Traders can invest between USDT 100 to USDT 50,000 or an equivalent value in crypto assets per portfolio.
If your plan is to only follow and copy other traders then there is no experience required, although it can be helpful in analyzing and selecting a good trader to copy. In reality, it is often the traders with no experience who like to use copy trading. It can be a good way to begin growing an account, and if you take the time to analyze the trades being made by those you follow it can also be a very good way to learn about trading too.
Copy trading profits are not guaranteed. As with all investments, there is always a risk. Copy trading carries a substantial risk with the possibility of both significant profits and losses. Past gains are not indicative of future returns.
The greatest risk an investor will face when copy trading is portfolio-selection risk. If the strategy of a Lead Trader is unsuccessful, its Copy-Traders can lose money. Copy-Traders also face slippage risk when copying trades of Lead Traders especially if the assets they are trading experience illiquid conditions when markets are volatile. Lastly, Copy-Traders can face systematic risks if the assets they are trading experience sharp declines or rallies.
Users’ funds will be safely secured on the partnering exchange (Binance). Users’ funds will remain in the partnering exchange’s spot wallet and funds will be transferred to TW wallet once a user copies a portfolio. Fund transfers are not conducted on-chain and they will remain safe in the partnering exchange wallet at all times.
All TW copy-trades are executed via a market order. Traders would also incur fees associated with futures trading, such as the funding fees charged on Binance. In addition, 10% of copy-trading profits will be shared with the respective Lead Traders.
While it might seem tempting to copy the trader with a 300% annual return, in general, these traders may be taking on far too much risk and may possibly incur huge losses. Instead, you can consider looking for traders who have a longer trading history and a smaller but consistent return.
The Lead Traders are also users from communities. Therefore, please make sure you have conduct thorough due diligence when selecting portfolios.
The trader should also be active enough that they are placing a minimum of one trade per week. This ensures that they are trying to grow their trading base rather than just locking your money in a single trade. If you want to spread out your risk you can spread out your copy trading between 2 different traders.
Position sizing for Copy Traders will be opened in proportion based on the initial margin. For instance, if the Lead Trader opens a position with an initial margin worth 1% of his/her portfolio, the Copy Trader will use the same margin percentage to mirror the position. In this case, if the Copy Trader's portfolio is worth 10,000 USDT, the system will take 100 USDT (1%) as basis to compute for the actual position size.
The actual copy amount may be less than the proportional copy amount as the system will take into account the following factors:
• Initial margin
• Slippage percentage
• Open loss
• Limit price
• Market situation
Please note that there may be a price difference between your copy trade and the entry price of the Lead Trader, this is also known as slippage. A copy-trade would be rejected if the price difference exceeds a reasonable range. The range might change based on the fluctuation of the underlying asset’s price.
Copy-trades are typically executed instantly and in real-time. However, do note that slippage may occur especially when the assets that you are trading experience illiquid conditions when markets are volatile.
You can set a stop-loss before copying a portfolio. Your stop loss can be set according to a specific movement in the market by percentage (15%-95%). Alternatively, click on [AMOUNT] to set it as a monetary value.
*Note: When your margin balance is less than or equal to the stop loss amount, the system will create a market order to close the position and exit the copy-portfolio.
eg. If you set the stop loss at 15%, which means when your margin balance <=15%, the portfolio will be closed, and at this moment, you lose 85% of your initial funds.
You can go back and adjust the stop-loss at any time while the trade is open. Simply go to the [Portfolio Management] tab and select [My Copied Portfolios]. Next, click on the portfolio that you wish to adjust your stop-loss and select [Adjust Stop Loss].
Under normal market conditions, stop-loss orders are not guaranteed. When the market is volatile, the stop-loss orders may not be traded in the market. In this case, the stop-loss will trigger at the next available rate. While stop-losses may reduce the downside risk of your investment, stop-loss orders do not provide much protection against high-risk portfolios, especially under extreme market conditions. Therefore, portfolio-selection risk is a critical factor that users must consider when social trading, in which an oversight may potentially cause a catastrophic loss in your investment.
Do note that the unrealized PNL of a copy-portfolio would be calculated based on the mark price. Therefore, when a position is stopped out, the realized PNL may exceed or be less than your stop-loss setting.
Click on the [Portfolio Management] tab located at the top right corner of your TW page and select [My Copied Portfolio].
All copied-portfolios will be displayed on your dashboard, where you will be able to view portfolio details such as margin balance, unrealized PNL, total PNL, and 24-hour change PNL. In addition, you will be able to view the actual and historical trade information such as contract (symbol), size, mark price, entry price, unrealized PNL, and return on equity (ROE).
You may exit a copy-portfolio from the [My Copied Portfolio] dashboard. Simply click on the portfolio that you wish to exit and click [Stop Copy]. A pop-up window will appear to display your portfolio details such as initial investment amount, account margin balance, PNL, estimated profit-sharing, estimated settlement value, and net ROI.