Copy Trading: How It Works, What It Costs and What to Check in the Stats

Copy trading automatically mirrors another trader's positions on your account. Your money stays with you; the manager gets access only to trading operations.

Three models

Social copying. You subscribe to a trader and their trades are replicated in proportion to your balance. You can unsubscribe at any time. The most common format.

PAMM. Investor funds are pooled into one account and profit and loss are split by share. Exits are usually restricted to rollover dates.

MAM. The manager trades from one terminal and orders are allocated across investor sub-accounts. More flexible than PAMM in setting proportions.

What to check in the statistics

• Track record length. Under a year is not enough.
• Maximum equity drawdown. The key number. If it is not shown, that is your answer.
• Trade count. Under 200 and the sample is not representative.
• Volume chart. Size rising after losses means martingale.
• Return to drawdown ratio. Below 2:1 the strategy is too aggressive.
• Average trade duration. Seconds and minutes mean copy slippage will be severe.

The hidden cost

Beyond the performance fee there is copy slippage. On scalping strategies targeting 5–10 pips, a 200–300 ms delay eats a large share of the result, and your curve will look noticeably worse than the provider's. The longer the trades, the smaller the divergence.

The core risk

Copying does not remove your risk — it hands the decision about it to someone you do not control. A manager can change style, scale up or start averaging at any moment. The only protection is capping the share of capital in one subscription and checking drawdown regularly.

Read next

• Expert advisors and robots
• Drawdown
• Martingale