How Does Copy Trading Work?

Copy trading allows a trader to allocate a certain amount of their funds to copy a specific trading strategy. These allocated funds are moved to a separate Copy-trading account, which is solely used to follow/copy the specific strategy.

A Strategy Provider executes trades from their trading account, and all followers automatically copy these trades based on the Equity-to-Equity model.

Equity-to-Equity Ratio

The volume of a trade that will be copied is determined by both the Strategy Provider’s and the Follower’s equities.

Equity-to-Equity Model Calculation:

The copied trade volume is calculated using the following formula:

(Follower’s equity / Strategy Provider’s equity ) * Strategy Provider’s volume

Example:

• Strategy Provider’s Equity: 4,000 EUR
• Follower’s Equity: 1,000 EUR
• Provider Opens a Trade: 400,000 units (4 lots) on EUR/USD

In this case, the copied trade volume will be:

(1,000 / 4,000) * 400,000 = 100,000 (1 lot)

This ensures that the volume of the copied trade is proportional to the ratio of the Follower’s equity to the Strategy Provider’s equity.