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What Is Copy Trading? How to Understand the Logic Behind Copy Trading?

25 oct 2023 3 min read
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Key Terms on the “Trader Details” Page

Total PnL:The total PnL of the trader’s account for copy trading, netting funding fees and commissions

Followers’ Total PnL:The total PnL earned by all followers who copied the trader

Win Rate:The ratio of win trades to total trades in the trader’s history

Current Profit-Sharing:The percentage of profits in a copied trade to be distributed to the trader

Avg. Profit:The average profit of all profitable copied trades

Avg. Loss:The average loss of all losing copied trades

PnL Ratio:The ratio of average profit to average loss

Avg. Holding Time:The average time the trader takes from opening to closing trades

Trade Frequency:The average number of trades the trader has opened in a week since they were followed

Preferred Pairs:The trading pair opened most frequently in the trader’s history of trades

Followers’ Logic

<1> With copy trading, a follower copies the trader’s position changes. The copy trading amount (rounded down) = copy units ratio * position changes. If the amount is lower than the set copy unit (the minimum allowable amount) for copy trading, then the orders will not be copied.

<2> The follower’s tradeable amount will then be calculated based on the follower’s available fund and futures leverage. If the copy trading amount is ≤ the follower’s tradeable amount, the copy trade will be made; or else the copy trade will fail.

<3> The follower copies all of the trader’s positions until the funds are used up, regardless of the copy units, leverage, and position limit for a single order. When the trader reduces the position of a copy-trading contract, the follower will have their position reduced too and thus have more available funds.

Profit-sharing Rules

After a follower closes all copy-trading positions, a portion of the net profits, determined by the profit-sharing ratio with the trader, will be temporarily frozen. These frozen profits will be held until a unified settlement occurs before 10 AM the following day, at which point profit distribution will take place. Net profits = Total profits – Total losses.

If a follower stops copy trading, the profit-sharing settlement will take place immediately. Any remaining funds after the settlement will be returned to the follower’s futures account, and the trader’s profit share will be distributed by 10 AM the following day.

Profit-sharing Ratio: Set by the trader; parameter modification is currently not supported when the Trader Mode is enabled.

Profit shared with the trader = ∑ (PnL amount from a copy-trading contract) * profit-sharing ratio. If the shared profit is > 0, it will be credited to the trader instantly. If the shared profit is ≤0, the trader won’t receive any profit, and the previously frozen profit will be returned to the follower’s futures account.

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