How to Vet a Copy Trading Provider
Copy trading transfers the entry decision to someone else's experience but does not transfer responsibility for risk. So vetting a provider is not about picking the prettiest curve — it is about finding signs of what produced that curve.
Vetting a copy trading provider: where to start
With the length of the history and the number of trades. A provider with three months and forty trades offers no statistics: such a result is equally well explained by skill and by luck. Below a hundred trades the dispersion swamps any difference between traders, and comparing them by return is meaningless.
What gives away martingale and grid
The same signs as with robots: a win rate near one hundred percent, no large losing trades across a long history, a rising average position size, and many positions open at once. The key check is a divergence between the balance curve and the equity curve: if drawdown shows only on the second, losing positions are not being closed but accumulated. More in our piece on vetting someone else's robot.
The numbers that matter more than return
Maximum drawdown and the time to recover from it. A provider with half the return and a third of the drawdown is better on capital at risk. Worth looking at separately is maximum floating drawdown: that is what shows what you would have had to live through, rather than what was left at the end.
What copying does not transfer
The size of risk relative to your account. A provider risking two percent of their own deposit may be risking something entirely different on your account with a different size and different leverage. Setting the copy volume is your decision, and it matters more than the choice of provider.
A practical order of operations
Eliminate everyone with less than a year of history. Of the rest, eliminate those whose balance and equity curves diverge. Of the rest, choose by return-to-drawdown rather than by return. And spread capital across several providers with different approaches — a portfolio of providers is sturdier than a subscription to one.
This material is for educational purposes and is not individual investment advice.
Frequently asked questions
How much history should a copy trading provider have?
At least a year and at least a hundred trades. On a smaller sample the result is equally well explained by skill and luck, and comparison by return is meaningless.
How can you tell a provider uses martingale?
By a combination of signs: a win rate near 100%, no large losses, a rising average position size, and a divergence between the balance and equity curves.
What matters more than return when choosing a provider?
Maximum drawdown, recovery time and maximum floating drawdown. A provider with a lower return and a third of the drawdown is better on capital at risk.
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