How to Copy Traders: Essential Metrics and Red Flags

Copy trading is precisely what it sounds like: you choose a trader you like, and your account automatically copies their trades.

If they buy, you buy. If they sell, you sell. It’s one way to get involved in online trading without having to devise your strategies or stare at charts all day.

It’s also becoming increasingly popular, especially among people new to trading or those who don’t have the time to manage every move themselves. But just because you’re copying someone else doesn’t mean it’s risk-free.

If you don’t know what to look for, you could end up following someone making risky decisions, trading too often, or chasing short-term wins that don’t align with your goals.

In this article, we’re not telling you who to follow, but we will walk you through how copy trading works, what metrics matter, and some red flags to watch out for. 

What is Copy Trading?

Copy trading is a type of trading where your account automatically copies the positions of another trader. When they place a trade, your account does the same.

You don’t need to decide or stay glued to the markets. Instead, you rely on an experienced trader’s trading activity and experience to guide your positions.

Most platforms offering copy trading allow you to choose from a list of traders, each with their profile, performance statistics, risk levels, and trading style.

Once you decide who to follow, any future trades they make are mirrored in your account.

This is sometimes referred to as mirror trading because your trades mirror the same moves as theirs.

It’s all done through automated trading. Once you’ve connected to a trader, your account executes the same buy and sell orders without you needing to lift a finger.

You can usually adjust the trade size to suit your account balance, and in some cases, you can set limits to manage your risk.

Behind the scenes, this process is facilitated by a trading platform that handles execution and maintains synchronisation.

The platform doesn’t just automate trades; it also provides data to help you decide who to copy.

You can examine factors such as how often a trader trades, how long they hold positions, which markets they focus on, and the level of volatility in their strategy.

Copy trading is convenient, but it’s also a way to learn by observing other traders’ actions in real time.

However, it’s not passive because choosing the right trader and regularly checking their performance is still part of the process.

You’re putting your money on the line, so it’s essential to know how it works and what to look out for.

Key Metrics to Evaluate Before Copying Traders

Before you copy a trader, it’s worth digging into a few key stats.

These metrics can help determine whether someone’s trading style aligns with your risk appetite and goals.

While no single metric tells the whole story, examining them together provides a more comprehensive picture.

1. Trader’s Performance

Begin by examining their overall returns. Most copy trading platforms display a performance graph, often broken down by month or week. Has the trader been consistent? Or are their results all over the place?

Big spikes followed by steep drops suggest a high-risk strategy, while a steady upward trend may reflect more controlled decision-making.

2. Past Performance

Performance history can give you context, but it does not guarantee future results.

A trader with a good run during one market condition might struggle in another.

Check how they’ve handled different market phases, such as volatility, downtrends, or flat periods.

Longevity matters. Someone who has been trading profitably for a year or more may be more reliable than someone who has had a good month or two.

3. Trading Frequency

The frequency at which a trader places trades can reveal a great deal. High-frequency traders might open and close positions multiple times a day.

This can lead to additional fees and increased volatility in your account.

Others might trade less often, holding positions for days or weeks.

There’s no right or wrong here, but ensure the frequency aligns with how active you want your trading account to be.

4. Risk Level

Most platforms assign each trader a risk score based on position size, leverage, and drawdown history.

A higher score typically indicates that the trader is taking on more risk, which can result in larger gains and losses.

Look at how often they use high leverage, whether they hold losing trades too long, and how much their portfolio value fluctuates over time.

5. Risk Tolerance and Risk Appetite

Before copying anyone, consider your comfort level with risk.

Are you OK with seeing your balance dip in the short term if the longer-term outlook looks solid? Or would that stress you out?

Matching a trader’s approach with your risk tolerance helps prevent unpleasant surprises.

You’re still responsible for the trades happening in your account, even if someone else is making the calls.

Understanding Trading Strategies and Styles

Understanding the various trading strategies and styles employed by traders can be helpful when deciding who to follow.

These approaches can shape everything from how often they trade to the level of riskiness in their decisions.

Just because someone’s results look strong doesn’t mean their style suits what you’re comfortable with.

Here are a few of the most common trading styles you might come across on a copy trading platform:

Day Trading

Day traders open and close positions within the same day. They often rely on short-term price movements and technical indicators to decide when to enter or exit.

This strategy can involve dozens of daily trades, which may result in higher transaction costs and brief periods of volatility in your account.

It can suit people who are comfortable with fast-paced decisions, but it may not be ideal if you prefer a more hands-off approach.

Swing Trading

Swing traders aim to capture gains over a few days or weeks, holding positions longer than day traders but reacting to short-term trends.

This style often strikes a balance between activity and patience, with traders employing a combination of technical analysis and broader market themes.

You’ll likely see fewer trades, but each may carry more weight in your portfolio.

Position Trading

This is a longer-term approach in which traders hold positions for weeks or months based on broader market views, such as interest rate trends, inflation data, or economic cycles.

Position traders may not trade frequently, but they focus on investment strategies rather than short-term price fluctuations.

Trend Following

Trend followers seek to capitalise on market momentum. Once a trend is in motion, whether up or down, they try to stay in as long as it lasts.

This can be done over any time frame and relies on tools like moving averages or price channels.

Scalping

This is a highly fast-paced strategy in which traders aim to make small profits from tiny price changes.

Scalpers might place dozens or hundreds of trades in a session, often holding positions for only seconds or minutes.

While it can be profitable, copying a scalper is a high-risk endeavour that requires constant attention.

Your account could be very active, and your costs may increase quickly.

Trading Forex vs Trading CFDs

Many copy trading platforms give access to different asset classes, including forex and CFDs (Contracts for Difference).

Forex trading involves currency pairs, which are among the most active markets globally.

CFD trading, on the other hand, allows you to speculate on a wide range of markets, including indices, commodities, shares, and bonds, without owning the underlying asset.

Different traders focus on various markets, and their strategies typically reflect this.

For example, a forex trader might trade more frequently and rely on short-term trends, while a CFD trader focusing on global indices might take longer-term positions.

The key is knowing what strategy your chosen trader is using and whether it aligns with your expectations.

If you prefer steady moves and fewer surprises, a high-frequency scalper probably won’t be a good match.

Conversely, a short-term trader might suit you better if you’re comfortable with more activity and quick decision-making.

Risks Involved in Copy Trading

Copy trading may seem like a straightforward way to get involved in the markets, but it still carries risk.

Just because someone else makes the trading decisions doesn’t mean you’re shielded from losses. Your money is still at risk.

Market Volatility 

One of the most significant risks is market volatility. Whether you’re trading forex, indices, or CFDs, prices can shift quickly due to news events, economic data, or unexpected sentiment changes.

If the trader you’re copying is heavily exposed to one market or strategy, your account could take a hit just as fast as theirs.

Losing Money Rapidly

There’s also the risk of losing money rapidly, primarily if the trader you’re following uses high leverage or makes large trades relative to their account size.

Even a short losing streak can significantly impact whether there’s a plan to limit the downside.

And because trades are mirrored automatically, you might not notice a problem until the losses have already stacked up.

High Exposure Risk

Some traders take on more risk exposure than others. That might mean holding multiple positions in the same direction or concentrating on one market.

If things go against them, it could result in significant drawdowns.

Without proper risk controls, those losses could flow through to your account.

Essentially, copy trading doesn’t remove the need for caution. You’re still responsible for who you choose to copy and how much capital you allocate to them.

If you’re not paying attention, you may end up in a situation that doesn’t match your comfort level or long-term goals.

Risk management tools, such as stop-loss limits, maximum allocation settings, or trade caps, are worth using from the outset.

You can still set boundaries to protect your account even when someone trades.

Copy Trading Red Flags to Watch Out For

Choosing a trader to copy isn’t just about performance. Sometimes a trader can show strong returns on paper but still carry more risk than you’re comfortable with.

Here are a few red flags worth looking out for before hitting “copy.”

Inconsistent Trading Results

If a trader’s performance graph shows sharp spikes and deep drops, that’s a sign that they might be taking aggressive positions or reacting emotionally to the market.

One good month doesn’t mean much if several losing streaks follow it. Look for traders who demonstrate consistency over time, not just brief periods of high returns.

High Trading Frequency

Some traders place dozens of trades a day. While this approach suits specific strategies, it also increases transaction costs and exposes the organisation to short-term market noise.

Unless you’re comfortable with that activity level in your account, it’s worth being cautious around traders who engage in high-frequency trading.

Losing Trades Without Adjustment

Everyone has lost trades. However, if a trader repeatedly makes the same types of trades and continues to lose without adjusting their approach, that’s a concern.

Patterns of repeated losses can manifest as large drawdowns or as a series of small trades that gradually erode the account balance.

Lack of Risk Management

Good traders limit their downside. If someone’s profile shows significant losses on individual trades or a history of letting losing positions run too long, they may not be managing risk effectively.

Compare their average loss size to their gains. A trader who cuts their losses early and lets winners run is often more disciplined.

No Alignment with Your Risk Appetite

Even if a trader is profitable, they might not fit you well. If they’re trading aggressively and your goal is steady, low-volatility returns, that mismatch can lead to a rough experience.

Ensure the trader’s risk profile fits your risk tolerance, or you’ll be more likely to panic during drawdowns or unexpected moves.

How to Choose the Right Copy Trading Platform

Choosing who to copy is essential, but choosing where to copy them can make just as much of a difference.

Not all copy trading platforms are built the same. Some offer more tools, better transparency, and stronger safeguards to help you manage risk.

Others might seem simple, but they can leave you exposed when markets move quickly. Here’s what to look for when comparing platforms.

Robust Risk Management Tools

Good platforms give you control. That means being able to set limits on how much of your balance is allocated to any single trader, capping trade sizes, or using stop-loss settings to mitigate your downside risk.

These tools protect your account and provide you with the flexibility to tailor your trading to your risk tolerance.

Some platforms also allow you to pause or stop copying instantly if you don’t like where things are headed.

That kind of flexibility is helpful, especially during periods of market volatility.

Reliable Trading Signals

Copy trading depends on trading signals and real-time updates that trigger trades in your account.

Delayed or inaccurate signals can lead to slippage, where your trade enters at a price lower than the original.

Look for a platform with a strong track record of execution and minimal lag.

This is especially important if you’re copying strategies that rely on speed, like day trading or scalping.

Transparency from Signal Providers

You should be able to view detailed statistics on any trader before deciding to copy them.

The best platforms break down performance history, trade frequency, average win/loss size, drawdowns, and risk levels.

This lets you make an informed decision based on more than just the headline return percentage.

Some platforms also display the number of others who copy the trader, which can be a helpful signal.

Remember that popularity doesn’t always equal quality; look deeper than the follower count.

Reputation and Regulation

It’s worth checking that a recognised financial authority regulates the platform and operates with a clear set of terms.

This can help protect you in case of disputes or technical issues.

A platform that has been around for several years, with a solid reputation for security and service, is usually a safer bet.

Platform Features and User Experience

The platform should be easy to use, whether you’re new to trading or have some experience. Features such as demo accounts, educational content, and a user-friendly interface can help you get started with more confidence.

Most copy trading platforms are available via desktop and mobile, so ensure the tools you need are accessible wherever you’re trading.

Platforms like PU Prime offer a range of markets to trade through CFDs, with access to detailed trader profiles, real-time execution, and built-in tools to help you safely manage your copy trading journey.

While the trader handles the strategy, the platform handles everything else, which must be solid.

6 Best Practices for Copy Trading Success

Your work isn’t done once you’ve picked a trader and started copying.

To give yourself the best chance of success, it’s worth following a few key habits.

These practices can help you stay in control, manage risk, and build a more resilient trading setup over time.

1. Start with a clear view of your risk tolerance

Before copying anyone, ask how much risk you’re comfortable with.

Are you comfortable with a few ups and downs, or would you prefer your balance to remain steady?

Knowing your risk tolerance helps you avoid traders whose strategies are too aggressive or unpredictable for your goals.

2. Diversify by copying multiple traders

One of the simplest ways to reduce risk is to spread it around. Most platforms allow you to copy more than one trader.

Doing this prevents you from putting all your funds behind a single trading style or market. For example, one trader might focus on forex, another on indices, and a third on commodities.

If one strategy underperforms, the others can help balance out the situation.

3. Monitor trades regularly

Even if the system is automated, it doesn’t mean you can set and forget.

Checking in on your copy trading account occasionally helps you spot any changes in performance or behaviour.

Has the trader started placing more trades than usual? Are losses increasing? Are they trading outside their usual markets?

These are all signs that it might be time to pause or reassess.

4. Use built-in risk management tools

Most platforms have features that limit the amount copied, stop copying after a specific loss, or set the maximum exposure per trade.

These tools exist for a reason: to help protect your balance when things don’t go according to plan.

If you’re unsure which settings to use, start with conservative limits and adjust as you build confidence.

5. Don’t be afraid to trade manually, too

Copy trading doesn’t have to be your only approach. If you’ve gained some trading experience and see opportunities that fit your view of the market, you can place trades manually alongside your copy trading setup.

Just ensure you’re not duplicating positions or inadvertently adding extra risk.

6. Review performance over time, not in a day

Short-term fluctuations are part of trading. A single bad week doesn’t mean your strategy is failing, but consistent poor performance over time might.

Try to view your account performance over a longer time frame, such as one month, three months, or a year. The goal is to track progress with enough context to make smarter decisions.

Copy trading is most effective when you remain actively involved. You don’t need to be an expert, but staying active, informed, and cautious can help you avoid common pitfalls and maximise the benefits of the process.

Next Steps in Your Trading Journey

Copy trading enables more people to access financial markets without having to develop complex strategies from scratch.

It allows you to follow experienced traders, learn from their decisions, and potentially grow your account by tapping into someone else’s expertise.

But it’s not hands-off. The most successful copy traders are those who remain curious, ask the right questions, and check in regularly.

Understanding key metrics, recognising red flags, and using proper risk controls are all part of keeping your account protected, even when you’re not placing the trades.

Whether copying one trader or building a diversified portfolio, take the time to review performance, manage exposure, and ensure the approach still aligns with your goals.

With platforms like PU Prime, you can access the tools and transparency needed to copy trade with more confidence and control.

Copy Trader FAQs

Can I lose money with copy trading?

Yes. Like any form of trading, copy trading involves risk. If the trader you’re copying makes a loss, your account will reflect that loss, too. Utilising risk management tools and selecting traders carefully can help mitigate your exposure.

What’s the difference between copy trading and mirror trading?

The terms are often used interchangeably. Both involve replicating another trader’s actions in your account. Some platforms use “mirror trading” to refer to copying a strategy rather than individual trades, but the core idea is similar — your trades reflect someone else’s decisions.

Can I copy more than one trader at a time?

Yes. Most copy trading platforms allow you to follow multiple traders. This can help spread risk and expose you to different strategies or markets. Just make sure your total allocations don’t exceed your account balance.

How do I prevent copying a trader if the situation changes?

You can pause or stop copying a trader at any time through the platform. Some platforms also allow you to close individual positions or adjust trade sizes. If a trader starts behaving differently or their results change, it’s smart to reassess your setup.

Do I need experience to get started?

You don’t need to be an expert, but having a basic understanding of how copy trading works and how to manage risk can go a long way. Many platforms also offer demo accounts, which enable you to test features without risking real money.