Selecting the Ideal Copy Trade Leader for Optimal Risk

What type of Copy Trade leader can we choose to follow? Even though those who become leaders in Copy Trading are known to have experience in trading and are more skilled than the average trader, choosing a trading leader to follow should involve considering several factors before deciding to invest.

Consistent Performance

Even if at times some trading leaders can generate high returns that motivate us to follow them, the consistency of their performance might be more important if we want the stability of our portfolio in the long run. If there are times when the performance of a trading leader drops, the returns of our portfolio will decrease as well. But if a trader consistently trades well, our investment portfolio that follows them will not fluctuate drastically.

Consistency can be judged from the long-term average returns, ranging from 3 months to over a year. If the returns don’t fluctuate significantly, it shows that the trader maintains consistent performance. This can also be considered from other statistics, such as the overall portfolio growth, whether it grew rapidly at a certain time but then fell sharply or grew gradually.

Time in the Market

Besides consistent performance, the experience of the trading leader is also important. In the volatile investment market, especially in the crypto market, market trends range from bull to bear, from extreme bullish conditions to quiet periods. Each market condition has different trading difficulties.

Some traders who started trading during a bullish phase or in bull conditions might be able to generate high returns easily as it doesn’t require much experience. However, if that trader has to trade in a bearish phase, the previously high returns might decrease. Therefore, choosing a trading leader should involve selecting someone with a considerable trading history, such as at least a year, to build confidence.

Trading Style Suitable for Us:

Even though some trading leaders can generate high returns, their trading style may involve high risk, causing the portfolio that follows them to be volatile. Those who cannot tolerate high risk may not feel comfortable following them. Therefore, choosing a trading leader whose style matches the level of risk we can tolerate is also important. Platforms that provide Copy Trading services often allow trading leaders to specify their own trading styles for others to see, and the statistics of their trading activities also indicate their trading style.

In summary, high returns from a trading leader may not be the best answer for choosing to follow them. Other factors must be considered in the decision, and most importantly, we must choose to follow those who generate returns and risks that we can accept.