You find a Master Trader with a 90% win rate. You copy everything, hoping for passive riches. A month later, they are profitable, but your account is blown. Why does this paradox exist?
šø 1. When you copy trade according to the master there will be a delay. The Master enters at $10. By the time the signal reaches you and you click, you fill at $10.8 š You always buy higher and sell lower. Their 10% profit margin becomes your 2%. If they break even, you lose fees. If they lose slightly, you lose heavily.
šø 2. You see the Buy/Sell, but not the Overall Strategy.
They open a massive Short. You copy. You do not know they hold huge Spot bags and the Short is just a Hedge. Price pumps, they win on Spot, you get liquidated on Short.
They have $1M capital, scaling in from $100 down to $50. You have $1,000 and All in at $100. When price hits $80, they keep buying; you are liquidated.
šø 3. The Master holds because they know why they entered (Technical analysis, Insider info). They have Conviction. You enter based on faith... in them.
š Price drops 10%. The Master is calm. You panic because you do not understand. You cut loss at the exact bottom before the reversal. You can't copy their mindset.
šø 4. When a Master has too many copiers, their position becomes bloated. Market Makers see the liquidation clusters of these copiers. They intentionally hunt Stop Losses to wipe out the herd first. The Master survives; you don't.
š¹ Trading is not just Entry. It is position sizing, risk management, and psychology. You can copy actions, but not thoughts. Use signals for reference only. If Copy Trading, treat it as high risk and allocate small capital.
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