Forex $ocial Traders
 

           

When Is It The Best Time To Stop Copying A Trader?

titanic-sinkingWhen you follow and copy a certain signal provider on  social investment networks like Zulutrade or eToro you need to be prepared to leave him/her at the right time.

The question is: “When is it the best time to stop copying a trader?

In general, the best time to leave a sinking ship is to leave before the ship sinks.  If you knew that Titanic was about to sink, would you jumped to first life boat or would you stay and hope for best? Why is that many followers and copiers stay with wrong traders and signal providers even if they are about to sink soon? Probably because they do not know they are going to lose their money and accounts.

But how do you realize that your copy trader is going to blow your trading account soon? My best advice is to watch his/her trading behaviour and whether he/she trades according to his/her own strategy description.  If you spot a change in your trader´s style, beware, that can be a beginning of the end.

Example:

In this example I would like to show you one very popular signal provider. Forex social trader “One Trade Longterm” from Austria has been providing his trading signals on largest social investment network Zulutrade.

sinking-ship-forex

He was doing very well for exactly one year when he earned over 2,300 pips of profit for his followers. After one year something happened and his equity went down and all of his earned profit has vanished.

What happened?

In trader´s strategy description you could read this: “ I only will open not more than 2 positions the same time. Please take a look at my history. To calculate the risk the stop loss of this system normally will be 90 pips. Limit will be <90 pips!

If you check his best/worst trade stats, you can find out what has changed. See below.

sinking-ship-forex2

As you can see, the trader changed his trading behaviour by breaking his own 90 pips stop loss rule. His stop loss was extented to more than 300 pips.  It was the best time to leave the trader. You could have left with nice profits and be safe. That was the beginning of the end. The trader has clearly displayed a lack of trading discipline. His emotional stability has been gone.  Later he let his losing trades run into even deeper loss, almost -600 pips.

If you start to copy some trader you do so because you like his trading style or strategy. But once that style is changed drastically, you should really consider abandoning the trader and look for someone else. It is better to protect your hard earned cash early than to be sorry later.

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