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Best practices in risk management with copy trading

Best practices in risk management with copy trading

This article is a brief guide aimed at helping you to navigate your way and join Bitget copy trading and start copying elite traders. In this article, we explained the core concepts of copy trading and what criteria you can use to help you choose a suitable trader to copy from.

When you have picked your trader that you wish to copy, you have to go through a series of steps, in which you will find that on top of the trader's own risk management, you can control your risk management as well by setting some parameters. This can be very helpful if you start following a trader for the first time, and to prevent making bigger losses than necessary. This puts the power in your own hands, without fully being reliant on the person you have chosen to follow. In this way you can start your copy trading in a responsible way.

Follow the trader

The first thing you want to do is switch to advanced mode in order to be in full control of your fund distribution.

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Here you can select the assets that you wish to follow your copytrader on. If you only want to copy trades that the trader makes on BTC, then you can grey out all other assets except the BTC pairs.

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This is where you can set individual settings on the way you wish to follow the trader. You can specify this for every asset individually that you have selected as part of your fund allocation.

Margin: This is the asset class you wish to use. What this means is here you can pick your collateral. If you want to only use your USDT collateral, then select USDT. If you want to spread your collateral over different assets and if the trader also does this, you can choose to follow exactly what the trader does.

Leverage: Here you can specify the amount of leverage you wish to use. If you trust the trader, you can choose to follow the trader. You can use the standard setting that you have already selected in your trading portal, or you can customize it yourself for full control. This is recommended to avoid being in an overleveraged position and protect yourself from any wild decisions your copy trader might make.

Follow mode: Here you can select how much funds you wish to allocate to the trader in question per individual trade. This allows you to spread your funds, and follow multiple people instead of betting it all on one horse. You can also choose to work with multipliers here, but in terms of risk management this is a situation where you let yourself be dependent on the trader's choice. Therefore, choose wisely and make sure you know fully what you are doing.

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Risk management:

This is where the safety trigger is built in for you. It is highly recommended to set your own parameters when first following a trader. Once you have seen some results that align with your expectations, you can rely more on the trader. Even then it is still recommended to determine strictly for yourself under what conditions you wish to liquidate your following position regardless of the traders actions.

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Stop loss ratio

Here you can specify when you wish to close the follow order when in a following trade. This can come in handy, as you have to realize that a copytrader might have a different portfolio collateral and strategies when it comes to risk management. It might be so that on one particular trade this trader is risking 10%. This might be unfavourable for you. Lets say you only want to risk 3% on any particular trade, you can set your own ratio here. This means that once the follow trade is breaching a 3% depreciation from your allocated position, you will no longer follow the trade, and cut the loss, even though the trader might remain in its position. This is very helpful, and highly recommend to take control of your own risk management. You never fully know what the real intention behind someones position is, and there might be more mechanics at play than is visible for you. Therefore, take your own responsibility and set your own values.

Take profit ratio:

Just as with a stoploss, it might be wise to decide on when you might want to take profit. In the event that the trader gets greedy, and does not take profit, you on the other hand can take profits by your own set parameters regardless of the traders actions. You therefore, once again remain in control of your funds.

Maximum follow:

This function comes in handy if you decide to automatically follow all actions of the trader. You can specify the maximum amount you wish to allocate to the trader in total. Keep in mind that a trader can open multiple positions. Your follow mode determines with how much funds you wish to follow per trade. With maximum follow, you effectively create a ceiling. This means that if you allocate $100 dollars in your follow mode, you put your ceiling on $500 dollars, then you can follow up to 5 trades. Upon the opening of a 6th trade of the trader, your account will not follow, until one of your open trades is closed.


As with everything in investing, always make sure you are risking amounts of money you can afford to lose. While following someone else you put trust in someone else. However it is always wise to remain in control when it comes to how far you are willing to go. Therefore, stay sensible and remain in charge of your own funds!

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The information provided above is not financial advice but for educational and entertainment purposes. Please do your own due diligence or consult a financial advisor before investing in any digital assets.

All opinions expressed on Bitget’s Soapbox (also known as the ‘Soapbox’) are opinions of individual traders using the Bitget platform, and do not reflect the opinions of Bitget or its affiliate companies and partners. The Soapbox author’s opinions are based upon information they confirm to be reliable, but neither Bitget nor its affiliates warrant its complete accuracy, and it should not be relied upon as such.