Copy trading

On a copy trading platform, experienced or popular traders make their activity public and followers choose whom to copy. When the lead trader opens, adjusts or closes a position, the platform mirrors the action in each follower's account, scaled to the amount the follower has assigned. Lead traders usually receive a share of their followers' profits.

Many centralized exchanges offer copy trading for spot and futures markets, with leaderboards that show returns, drawdowns and number of followers. Some on-chain tools let users follow specific wallets on decentralized exchanges or perpetual futures platforms in a similar way.

Leaderboard returns can be short-lived or the product of high leverage and luck, and the most visible traders are often simply those who won recently. Followers can get worse prices than the leader because of delays and slippage, and the losses are entirely theirs. Capping the allocation, setting a stop-loss on the copied portfolio and checking how much leverage the leader uses limit the damage.