Binance Copy Trading | All You Need To Know

Step 1. Navigating to the Copy Trading Sectio

Getting to the copy trades page on Binance can be tricky because of the many other features of this largest cryptocurrency exchange.

If you're working through a web browser on a desktop computer, select Copy Trading from the menu that appears when you load the Binance Futures section.

Or simply type the URL into the browser bar: https://www.binance.com/en/copy-trading

Interface of Binance Copy Trading home pag

If you're using the Binance app on your cell phone, just type Copy Trading into the search bar on the home screen. The search results will give you an article about what Copy Trading is, from which you can navigate to the desired page.

The Binance Copy Trading homepage provides a list of traders (portfolios) whose trades you can start copying to your account.

Features:

• The interface allows you to evaluate the yield curve. Obviously, the smoother and steeper the growth curve is, the more attractive a portfolio becomes for copying.

• The list of portfolios can be sorted by profitability (PnL, ROI) for 7, 30 or 90 days, popularity, Sharpe Ratio value (the higher the better).

• There are about 1,400 portfolios available on the list (and this number is growing). To save your favorite portfolio to the Favorites list, click on the star.

In the settings, it is advisable to disable the display of portfolios that are not available for copying (because the limit of e.g. 200 followers has been reached).

• a steady growth curve with no significant drawdowns;

• a Sharpe ratio greater than 1;

• a long enough performance period.

More tips will be summarized in the table below.

For example, you've found a portfolio that interests you. You click on its title - and then you get more information:

Selecting a Trader to Copy

The trader has not provided much information about the strategy he is trading, which is not very good. The system warns that the Lead Trader is using high leverage - a reason to be cautious.

ROI and PnL values are excellent. To judge the drawdowns allowed, there is little information - and this is a drawback for the platform. Perhaps this is done so as not to scare potential investors?

A Sharpe ratio of over 9 is an extremely high value. Perhaps it turned out so because the trader started working not so long ago.

Followers have profits - this is also good.

The number of trades is a little more than 30. This is not a very large number to assess the reliability of a trader.

$10 is enough to start copying his trades. This is good because the most advanced traders set the minimum amount to copy their trades at $1,000 or even more. This greatly limits the choices for beginners.

Just below (you can't see it in the screenshot) are statistics about trades - it can be an important source of information about the strategy. It is advisable to study it if you are going to risk significant amounts of money. You can understand whether the trader uses averaging, whether he trades only long or short, and other details.

Let's assume that you are interested in starting copying this trader's trades. What next?

How to Start Copy Trading

Suppose you have allocated $100 to copy trades in the selected portfolio. The funds for copying will be debited from your Spot account.

The volume of positions will be calculated proportionally. That is, if a Lead Trader operates with an account of 1,000 dollars, your account will open positions 10 times less.

Setting a stop loss is important. That is, if a trader trades badly, copying of his trades will stop automatically. The maximum loss is limited to 10 dollars. When portfolio copying stops, the funds are returned to the Spot account.

Then you need to check 2 checkboxes (agree that 10% of your profit will go to Lead Trader) and click Copy. After confirmation, the system will display a message that copying has been successfully activated and offer to return to the list of portfolios.

At this point a question may arise. Can I copy multiple traders on Binance? Yes. Diversification requires copying multiple traders.

Then, how can a diversified portfolio be formed? Let's say you have 1,000 dollars. You decide to select 10 traders, provide $100 each, and set a 10% stop loss on each copy. If one of the copying stops because of the stop loss, the capital will only decrease by 1%, which is in line with common money management recommendations.

The screenshot below shows that there are 6 strategies in the portfolio (the actual portfolio of one of the experts from the Traders Union) to copy. The top one is the one added in the previous step. There are no deals on it yet.

And the strategy added 2 days earlier has already made a profit of more than 14 dollars.

Managing Your Copy Trading Account

Also in the screenshot you can see that copying of 16 portfolios has already been closed. Some copying processes were stopped manually (due to a zero number of trades), copying of the rest was finished automatically due to a volatility surge on the market. At this point you may think about increasing the stop loss for each portfolio from 10% to 15-20%, but this is a personal matter for everyone based on risk tolerance.

But if we compare the amount of losses on closed strategies (some of which made profits before they were closed) and the amount of profits on strategies that remain open, the result is positive. Approximately 3:1 is the ratio of profits to losses.

While the profit amount falls short of expectations, it's important not to underestimate the challenges of generating significant passive income through copy trading on Binance.

Learn how to withdraw funds from Binance with this step-by-step guide.

Prioritize risk management by setting stop-loss orders and diversifying your portfolio to spread risk. Staying informed about market news, trends, and regulations is crucial, as market sentiment often shifts based on these factors. Control emotions like fear and greed to stick to your trading plan and maintain discipline.

Additionally, backtesting strategies using historical data helps refine approaches for various market conditions. Engaging with the crypto community provides valuable insights, contributing to ongoing learning. Earnings for master traders vary based on factors like invested capital, chosen strategy, and prevailing market conditions, with potential for profitability alongside inherent risks.

Spot Copy Trading Rules

Open Position Rules

• When a Lead Trader executes an order, the Copy Trader's system immediately replicates the trade.

Different order types are used

• Taker (Market/Stop Market): Immediate execution at the current market price.

• Maker (Limit, Stop Limit): Order is placed at a specific price, and it executes when the market reaches that price.

Close Position Rules

• When the Lead Trader closes a position, the Copy Trader's system mirrors the action.

• Market orders are typically used for immediate execution.

Trading Fees

• Fees follow the Copy Trader's Binance account VIP level.

• BNB cannot be used for fee deduction.

How Position Sizes are Calculated

Opposite Positions/Offset

• Lead Traders may open opposite positions to limit losses/gains.

• When Lead and Copy Traders have the same position, the system only closes the Copy Trader's position if Lead Trader opens an opposite position.

• If Lead Trader opens a position but Copy Trader doesn't, the system opens a position for the Copy Trader.

Reasons for Copy Trading Failure

• Insufficient margin balance in the Copy Portfolio.

• Unfilled limit or stop-limit orders by the Lead Trader.

• Market slippage exceeding limits.

• Lead Trader opening opposite positions.

• Position size below the symbol's minimum notional value.

Failure Resolution

• If the Copy Portfolio fails to copy 5 consecutive orders due to insufficient margin, it's automatically closed.

• The system reallocates copy trading amounts if the number of Copy Traders exceeds the limit.

• These rules and conditions ensure that Spot Copy Trading on Binance is conducted smoothly, with safeguards in place to manage risk and ensure fairness for all traders involved.

Some more content here

Special Features

• Customized Alerts: Users can receive alerts tracking rankings and key performance metrics of traders.

• Real-time Portfolio Updates: Notifications are sent when positions are opened or closed within subscribed portfolios.

• Top Performing Portfolios: Users can easily view the top 5 portfolios based on profit and return on investment (ROI).

Interacting with the Bot

Users can interact with the Binance Copy Trading Bot in the following ways:

• Search: Users can search for the bot (@BinanceOfficialCopyTradingBot) and interact directly.

• Invitation: Admins of public channels or private groups can invite the bot into their groups, allowing members to engage with it.

Key Benefits

• For Lead Traders and Influencers: Lead traders can deploy the bot in their Telegram groups to share real-time portfolio updates with their community. Additionally, they can set their referral ID, potentially earning referral bonuses when new users register via their link.

• For Copy Traders: Copy traders can conveniently view rankings and essential metrics of top-performing portfolios via Telegram.

In essence, the Binance Copy Trading Bot enhances the copy trading experience by providing timely updates and insights to both lead traders and copy traders within the Telegram platform.