CopyOp Social Trading

There can be something to be said for all teaming up socially to follow the herd, as tracking momentum -which you are partly sustaining yourself - can be a self-fulfilling prophecy in some types of markets.

The problem however with blindly following a trading/betting pattern set by others is that they are playing with very different amounts of capital or may even be a 'bot' set up by the system to encourage participation with a monstrous tolerance for risk and a large amount of churn to allow the 'spread' to be taken on higher frequency trades than you would have placed yourself.

You may think that someone with £200000 of capital can still be 'followed' by scaling down the bet size and just doing £2000.00 yourself. He takes a £10,000 position and you follow the strategy investing £100 yourself.

However, what if he takes a £900 position and you can't follow because the minimum deal size is £1 not £0.90. You would have to just pass on the investment (which might be the one that makes a great return to bail out the other bad deals). Or alternatively go in for a full £1 and then you can no longer make the 1999.10 deal that he makes next.

Or for example the trader you're following sets up a trading pattern deploying £19,900 of his £20000. You follow suit with £1990 of your £2000. Then all of a sudden the member you are watching and following gets instantly wiped out at a stoploss and he instantly adds £40,000 to his account and invests £39800 to double up. You did not see that coming and so are not expecting to need to find £4k to instantly top up your account and go back in.

So the risk of ruin from poor money management is astronomical when you are following someone else. And following them without investing / betting is just getting ideas, it is not actual 'learning'. The learning comes from making expensive mistakes.

On that sort of a platform, the popular people with all the followers are either the ones that appear to take high risks and win big, or those taking modest risks to grind out small wins with a high proportion of wins but low overall profit.

The first is par for the course, big risks can be big wins or big losses followed by re-registration with a new username that doesn't have a history of losses. You don't need to 'follow' them to be able to make crazy trades and cross your fingers for luck. You might as well go to the casino.

The other type, 'slow and steady' sounds good right? But any chump can make money on most of their trades. It would be like betting on a roulette wheel and saying you will bet £10 on the first third of the board and £10 on the last third of the board. About two thirds of the time you will win £30 for your £20 investment. But a third of the time you will lose £20 and win nothing when it lands on the middle of the board. It is not a winning formula even though it will seem to win most of the time and you can have a long lucky streak where you have both a high win percentage and an overall profit. At the time you jump in to auto-copy future trades, it can turn unlucky.

So, whether or not a specific, lightly-regulated 'social trade-sharing website' turns out to be an outright scam or not, there is little value in signing up to copy the actions of others. An accident waiting to happen. Just copying someone else (especially if here is any delay before a trade is booked) doesn't work.