Has anyone made consistent returns copy trading?

Copy Trading is the process where one trader’s account is set up to automatically copy the trades of another trader. The principle behind the relationship is that the ’lead’ trader has the time, resources and skills to make a profit and the copying trader in return for a fee, applies the trading decisions to their own account. One of the most interesting aspects of this setup is that the lead traders disclose their performance track record as a means of attracting followers. A quick browse of some of the well-established copy trading platforms, such as eToro and ZuluTrade, offers a taste of the kind of returns some traders are making? These traders also make available information on their trading strategy, how long they have been running it and even whether or not they have invested their own money in it. A question which arises is how to best turn this information into consistent returns for the follower? Regardless of the track record of the Lead trader there are risks associated with copying. Primarily, the trading style that is used to generate consistent profits may be different from the strategy you join at a later date. Previous performance is no guide of future performance. This may be because the strategy used by the lead trader works in certain markets but not in others. It could be that the lead trader changes the strategy. Whilst there are ‘clues’ to whether this is the case, as a copying trader you are always exposed to these risks. The platform ZuluTrade has even brought in a program called ZuluGuard that monitors your account and the decisions of traders you are following. If it detects a significant change in the Lead trader’s performance it will step in to protect your account. Diversifying your capital across a range of lead traders may be another way to minimize the risk of one that you are following performing badly. This is a classic approach to investment and is particularly important if you are looking to trade in size. Copy trading is an increasingly popular way for people to gain exposure to the capital markets. Whist not as demanding as trading your own book it does still require careful and consistent management. The decisions of what and when to trade may be someone else’s, but the capital at risk is your own.