Two Reasons why Copytrading PNL leaderboards won’t make you any Money in Crypto

Hi r cryptocurrency

I thought i'd share some really interesting findings i made. Many crypto traders really love pnl leaderboards with succesful traders and also many exchanges offer copy trading. The sad thing is that most copy traders actually lose money for three reasons.

The first reason and that is the most important one. Most, if not all, top traders on leaders have excellent risk management. However, you will be entering and exiting after that trader. The same as all the other traders. If he has an average of 2% profit every trade and you enter at +1% of the price and exit -1% after him that means on average you would be at 0%.

The second point is that high PNL and Winrate has no indication that the traders are good at determining the direction the market will take. Funny enough while backtesting different traders there are actually some traders that are really good at determining the direction but really bad at risk managment. These traders won't appear in leaderboards.

I actually did a lot of backtesting on wallets and it is interesting. If you want to create a good group of wallets to copy focus more on those that get direction correct and don't focus on winrate and pnl.

Last but not least this is also interesting the winrate is also very strongly dependent on which coins they trade on. Some coins are really hard to predict very volatile.

Feel free to discuss below. Simple questions but also questions around backtesting oos testing and so on.

tldr; thought i'd share these insights because many traders think they can get rich copytrading top winrate or pnl leaderboards from different exchanges.