Monetization through Trade Copying: The Mechanism of Copy Trading and Profit Sharing

To generate profits in the trading market, skilled expertise and experience are required, but utilizing a copy trading system can solve these challenges. This system replicates the trading strategies of experienced traders and shares their results among participants. By having two roles—master traders and followers—collaborate, it lowers the barriers to entry into the trading market and provides benefits to both parties.

Value Gained by Master Traders and Followers

There are two participation modes in copy trading.

Followers: Followers can directly replicate the trading strategies of proven master traders. This allows access to professional-level trading strategies without relying on personal experience or knowledge. Using the same trading logic, followers can expect to gain profit opportunities.

Master Traders: Experienced and successful traders offer their strategies to attract new followers. They receive a portion of the net profits generated from followers’ trades as rewards, creating an additional income stream. This profit-sharing system enables top traders to achieve scalable earnings through strategy provision.

Differences in Profit Sharing Based on Rank System

The profit sharing rate for master traders varies according to a rank system based on their performance. The main ranks and corresponding sharing rates are as follows:

As the rank increases, the profit sharing rate becomes higher, incentivizing successful traders to participate. This system encourages the entry of talented traders and aims to improve the overall quality of copy trading.

Copy Trading Operation Mechanism: From Signal Transmission to Execution

For copy trading to function effectively, a complex technical infrastructure is in place. When a master trader opens a position, the trading signals are mirrored in real-time to followers’ accounts. Followers can choose between two execution methods:

Method 1: Ratio-Based Replication
Positions are automatically scaled based on the ratio of the follower’s available balance to the master trader’s balance. This ensures appropriate sizing according to each follower’s capital.

Method 2: Fixed Margin Replication
Trades are replicated based on a pre-set fixed amount determined by the follower. This method allows for more predictable position sizing.

An important note is that only trades initiated after the follower starts following will be copied. Existing positions prior to following are not included.

Conditions and Participation Method to Become a Master Trader

To offer your trading strategies, you must apply through the official platform. Once approved by meeting certain criteria, you gain the right to receive a share of the profits generated by followers. For details on rank advancement and specific participation requirements, it is essential to refer to the official guidelines of each platform.

Risks and Realistic Expectations

Copy trading functions as an efficient means of monetization, but there are important considerations. Past performance of master traders does not guarantee future profits. Market conditions can change, and strategies that worked previously may not remain effective.

Additionally, slippage (execution price deviation due to market price fluctuations) and timing differences in when followers start copying can cause actual follower returns to diverge from the master trader’s returns. These discrepancies can range from minor to significant, so proper risk management and not overly relying on copy trading are crucial.

When utilizing copy trading, understanding these risk factors and determining participation size according to your risk tolerance are vital.