Letztes Update: 16. September 2024
Time and again you hear about more or less dubious machinations of copy traders (yes, it’s mostly men), but as always I don’t just want to write from hearsay, but about my own experiences. In spring, a newsletter from a German influencer fluttered into my mailbox, advertising copy trading as “automatic passive income trading” and “1,500% returns in 1.5 years”. She herself notes in the newsletter: “Sounds more like a scam, doesn’t it? But it’s not, otherwise I wouldn’t be sending you this email. 😅” That already sounds very shady to me, but it gets even better. Because the first thing I have to do is open an account with a forex broker based in Belize.
A follower asks the influencer on Instagram why the trader trades publicly, as he could keep all the profits for himself and become rich. The influencer replies: “Because there are people who seek challenges in order to constantly develop themselves (especially those who are successful) and because there are people who actually have a good heart and want to make things possible for others.”
How does copy trading work?
But first to the basics. What is copy trading anyway? Copy trading is an investment strategy in which investors automatically copy the trading decisions of a trader. So you don’t always have to sit down at your computer and manually re-trade the trader’s buys and sells, a broker does this automatically for you – it copies them for you.
The Copy Trading Trader
The trader advertised in the newsletter is the founder of a “renowned company” based in Dubai and, according to the website, has an “impressive track record in trading”. He has earned a reputation as a reliable and profitable trader.
And he also advertises this quite confidently on YouTube. So that you don’t have to sit through the 25 minutes of adulation, I have summarized some of his statements on the “absolute supreme discipline” – copy trading.
“We will write history again!”
“Yes, I will make the comeback of the year, of the century, if not of my personal life in copy trading.”
“There has never been a copy trader who has played on the scale that we have.”
“Yes, I’ve set myself up perfectly – that means my intention is 0.00% any financial aspect. Of course, I will definitely earn a lot of money with it, yes. But I’m also going to put a lot of work into it.”
“I’m not flawless either. With just one mistake, you can wipe out your entire account within 10 or 20 minutes. Yes, thank God I’ve already gained my experience and that won’t happen 99.99% of the time, but 0.01% remains.”
“I am extremely, extremely strong and I am grateful for this strength. I have also acquired this mental mindset strength over the years.”
“I want to turn the 1,400% into 10,000%, that’s my personal goal!”
Opening an account with a Forex broker
Before I can take part in the “comeback of the century” and turn my EUR 100 passively into no less than EUR 10,100, I first have to open an account with the Belize-based forex broker.
The influencer promoting the trader has kindly created a three-page guide. In it, she explains how to open an account, deposit money and connect with the trader. Regarding the costs, she notes: “Every Friday [werden] transfers 30% of your profits to him [den Trader]. I think that’s more than fair, because we make money while we sleep, while someone else does such a cracking job for us!” Nowhere does it say that she receives an affiliate commission for the sheep she recruits. And of course it says: “This is not investment advice! I exclude all liability!”
Interestingly, the forex broker launched its new Infinity program on February 5, 2024. The newsletter from the German influencers came shortly afterwards. A coincidence? Hardly, the conditions of the Infinity program are too tempting: the program offers partners up to 85% of the average spread from closed positions of clients and 20% from daily swaps on open positions, with the aim of increasing partner commissions by up to 5.4 times compared to the previous VIP partner program.
Opening and connecting to the copy trader is quite complicated and if I hadn’t done the research for this article, I would probably have bailed out beforehand. But it worked out and I deposited EUR 100 into the account using a debit card.
Start Copy Trading
The influencer is happy on Instagram that the trader is “eeeeefinally” starting to trade again and about the “passive income”, which is an additional building block for the portfolio. However, the trader is not really getting off the ground, he commented on Instagram as follows:
“Still satisfied because I stuck to my trading plan. Even a negative week can be a good week.”
But copy trading doesn’t really want to get going after that. The portfolio has now recorded a loss of 25% and the trader has the following to say in the Telegram group with 11,000 subscribers: “It’s a mess at the moment. Many setups that look promising unfortunately don’t work out in the end.” And he spreads slogans of perseverance: “My copy trading at the time also got off to a difficult start and then took some time to go through the roof.” For accounts under EUR 100, it also makes sense to increase a little, as he cannot guarantee a 100% exact proportion ratio for this portfolio size.
Concerned, I turn to the influencer. I was unsure what I should do now. She writes that she doesn’t think the current development is “nice”, but that he proved in 2022 what a great trader he is and that she personally will stick with him.
The crash
Then, in mid-June, came the total crash. Shortly before, it had reached an all-time high and made up all its losses, even standing at over EUR 100. But shortly afterwards, the portfolio plummeted – down 75%. He asks his followers not to bombard him with messages, as he doesn’t need that right now.
He addresses his subscribers in an emotional video. On the verge of tears, he explains that something happened out of “over-motivation” that shouldn’t have happened. He “totally fucked up”, but always acted with “good intentions”. He had “blindly staggered in”, which “should never have happened in my life”, he had “fallen into the bear trap” and “I could cry, but I can’t”.
A little later he writes on Telegram:
“I just need a break from the stress of copy trading. Continuing would only lead to more losses.”
“Unfortunately, we are also aware that smaller accounts with balances under €500 have suffered a total loss.”
“However, everyone was aware of the risk, including a total loss, and unfortunately everyone has to take responsibility for this themselves.”
He hands over the copy trading account to his business partner, who continues trading. Equally unsuccessful: my account shows a loss of 99.64% in August. To get back to EUR 100, it would need a profit of 27,677.78%. This is far more than the trader’s original target profit of 10,000%.
The trader of the century wiped out 6 million, but he has nothing to hide – after all, almost 25 million went to investors in the first round. Shortly afterwards, he posted again on Instagram that he had made almost USD 8,000 in just a few minutes with his own trading account and was using it to finance his life. And uses it to promote his Trading Academy. And the influencer? According to her, she exited at the peak.
Conclusion Copy Trading
So, now I’m getting a bit old-fashioned:
- Don’t let greed be your guide when investing!
- Big promises of returns are always dubious.
- Be satisfied with the average.
- Don’t look for a needle in a haystack, buy the whole haystack. (John Bogle)
- Only invest in things you understand.
- Block out all the investment noise and find a hobby outside the financial bubble.
- In short: stay away from copy trading!
Transparency and disclaimer
I was not paid by anyone for this blog post, it reflects my subjective opinion.
If you open accounts or business relationships, order products or services through my links and codes, I may receive a commission for doing so. However, you will not suffer any disadvantages such as higher prices or the like. The terms and conditions of the respective providers apply. Affiliate links are marked with a *.
Investments are associated with risks which, in the worst case, can lead to the loss of the capital invested.
All publications, i.e. reports, presentations, notices as well as contributions to blogs on this website (“Publications”) are for information purposes only and do not constitute a trading recommendation with regard to the purchase or sale of securities. The publications merely reflect my opinion. Despite careful research, I do not guarantee the accuracy, completeness and timeliness of the information contained in the publications.