Selecting a legit copy trading platform can be challenging. Some of them have high-risk portfolios and poor bankroll management skills. Nonetheless, while it can take expertise and time, you can find individuals with high-winning rates to copy their trades. Let us check how you can analyze the best signal providers when investing with copy trading sites.
You can identify legitimate social traders by checking comments from their followers. Evaluate the real cash (not demos) other players have invested and the profits. You can access details on the profile pages of the investors.
Avoid traders with few followers and copiers. Moreover, the most emulated isn’t always legit. Some signal providers use various approaches to attain impressive rankings via questionable moves, such as manually copying other top investors.
The amount of cash invested in the expert can be a good performance indicator than followers. The best thing is that some copy trading platforms rank traders by Asset Under Management (AUM) or Copy Value – how much funds invested in them.
Negative returns signal poor performance. You can check the yearly or monthly earnings that the trader generates. Be careful with massive returns. Annual profits above 70% can be due to immense risk or luck.
You can assess the profit chart to understand the trader’s potential. Pick providers that have accumulated consistent rising returns for some time. Investors with irregular graphs could be gambling. And that leads to enormous returns and huge losses.
Number of Trades
Also, you can find legit signal providers by checking the number of trades they undertake. More than 100 closed trades is an impressive indicator as it shows their success isn’t down to luck. Nevertheless, that can vary depending on the trader’s tactics. Long-term participants maintain their positions for a long.
While copy trading means following experts, you should beware of some technicalities. For instance, understanding the Risk Score, calculated on a scale of between 1 and 10 in most social trading sites, is crucial. It’s best to consider investors with consistent scores. The number should be the least possible while guaranteeing the desired results.
Trading and investing have an inverse connection between risks and potential returns. Depending on your approach, you can go for a risk level of between 0 and 5. Meanwhile, follow traders that use risk management functions such as the Stop Loss.
Some copy trading sites rank users by levels, and traders should accomplish some conditions (including increased real cash invested, controlling drawdown, and consistent gains) to attain higher spots. Generally, highly ranked traders are more experienced. Also, some sites have demo accounts for signal providers. Ensure your dealer’s records are from real money.