Traders Union research: Copy trading does not guarantee passive income
Copy trading is often seen as a way to earn passive income, but in practice, results are mixed. A new Traders Union study showed that almost half of users turn to this tool for passive income, while only a small share consider it a reliable strategy.
In the study “Copy Trading: Smart Investing or Hidden Risk?”, Traders Union analysts note that copy trading has become one of the notable areas in retail trading. Modern platforms allow investors to automatically replicate the trades of more experienced traders without developing their own strategy.
According to the study, 46% of users started using copy trading because they expected passive income. Another 32% cited a lack of trading experience, 28% wanted to learn from more experienced market participants, and 26% pointed to a lack of time for active trading.
Results are not always encouraging
Despite the popularity of copy trading, not all users generate stable profits. According to Traders Union, only 24% of traders reported stable profits after six months of using copy trading. Another 18% said they made profits, but their results were unstable.
At the same time, 39% of users ended up unprofitable. Another 9% broke even, and 10% stopped tracking their results. This shows that automatic trade copying does not protect traders from market risks.
Many users eventually stop using copy trading. Among former users, 34% named losing money as the main reason. Another 27% left because of excessive drawdowns, 22% because returns were below expectations, and 18% because they lost trust in the trader they were copying.
The risk remains with the user
The study also showed that traders often choose a strategy based on past returns. For 36% of users, historical profitability was the main criterion when choosing a trader to copy. At the same time, only 22% primarily look at maximum drawdown, and 11% focus on the risk score.
This creates a problem. High past returns may look attractive, but they do not guarantee the same results in the future. If a trader uses high leverage or an aggressive strategy, the follower may face a sharp drawdown even when trades are copied automatically.
Traders Union analysts emphasize that copy trading should be viewed as a tool, not as a guaranteed source of income. Users still need to monitor risk, position size, drawdowns, trading history, and strategy stability.
Earlier, Traders Union also published research on how traders use artificial intelligence in trading.
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