Definition
Copy trading is a concept in which one account is set to mirror the trades of another account, usually belonging to a more experienced or visible trader. When the lead trader opens, modifies, or closes a position, the same action is executed automatically on the follower’s account, typically in proportion to the follower’s allocated capital. This setup is usually offered by centralized exchanges (CEX) or specialized platforms that connect traders and followers through integrated tools. Copy trading focuses on delegating decision-making rather than manually analyzing markets and placing each order independently.
In crypto markets, copy trading can be applied to spot markets or to derivatives such as perpetual futures, where positions may involve leverage and carry specific liquidation risks. The follower’s outcomes depend not only on the lead trader’s decisions but also on the follower’s own risk profile, including how much capital is allocated and what leverage settings are chosen. While the trades are replicated automatically, the underlying account remains separate, and the follower retains control over whether to continue or stop copying. Copy trading is therefore best understood as an automated mirroring arrangement rather than a pooled investment fund or shared account.
Context and Usage
Copy trading is commonly positioned as a way for less active or less experienced participants to gain exposure to strategies already used by other traders on a CEX or similar venue. Platforms usually provide performance statistics, risk indicators, and historical data for lead traders, which followers may review before deciding whom to copy. In practice, the concept relies on standardized order execution so that the same type of position, market, and direction is opened on both accounts at nearly the same time.
Because copy trading often extends to leveraged products like perpetual futures, it is closely tied to concepts such as leverage and liquidation. The follower’s risk profile can differ from the lead trader’s even when the same trades are copied, due to differences in account size, leverage levels, and margin settings. As a result, copy trading is defined less by guaranteed outcomes and more by the structural link that causes one trader’s actions to be systematically replicated by another account.