Why Did My Trade Close with a Loss While the Strategy Provider Closed the Same Trade with a Profit?

Understanding how the copy trading mechanism works is crucial to explaining this situation.

Copying Open Trades:

• When you start following a Strategy Provider who already has open trades, the system will copy these trades for you at the current market price.
• It is possible that the Strategy Provider is already profitable on these trades when you start copying.

Market Movement:

• If the market moves against the direction of these trades after you start copying, the Strategy Provider may still be in profit while you incur a loss.
• If the Strategy Provider decides to close these trades at this point, they may close with a profit, while your trades close with a loss.

Equity Differences:

• Another possibility is the difference in equity between you and the Strategy Provider.
• Copy trading uses the Equity-to-Equity model to define the volume of all open trades.

Equity-to-Equity Model Formula: Follower’s Trade Volume=(Follower’s EquityStrategy Provider’s Equity)×Strategy Provider’s Trade Volume\text{Follower’s Trade Volume} = \left( \frac{\text{Follower’s Equity}}{\text{Strategy Provider’s Equity}} \right) \times \text{Strategy Provider’s Trade Volume}Follower’s Trade Volume=(Strategy Provider’s EquityFollower’s Equity​)×Strategy Provider’s Trade Volume

Example:

• Strategy Provider’s equity: 1,000 EUR
• Follower’s equity: 10,000 EUR
• Provider opens a trade of 100,000 units (1 lot) on EUR/USD.
• Your copied trade volume: $(10,000/1,000)\times 100,000=1,000,000$ units (10 lots)

Price Execution Differences:

• When the Provider closes their 100,000-unit trade, the execution price might be better than the closure of your 1,000,000-unit trade.
• This difference occurs because larger volumes can be more expensive and may not execute at the same price as smaller volumes.

Recommendations:

• We strongly recommend monitoring the Strategy Provider’s equity before deciding to start copying their strategy.
• Understand that market conditions and trade volumes can lead to different outcomes between the Strategy Provider’s trades and your copied trades.

By considering these factors, you can better understand why your trade might close with a loss while the Strategy Provider’s trade closes with a profit.