Copy trading on Deriv Nakala offers a flexible way to participate in the financial markets by allowing you to mirror the strategies of experienced traders—known as strategy providers. However, just as with any type of trading, success depends on making informed choices and effectively managing risks. Selecting the right strategy provider, reviewing their performance, and using Deriv’s built-in risk management features can make all the difference. This guide will take you through everything you need to know to set yourself up for a safer and more successful copy trading experience.

Understanding strategy provider metrics

Before copying trades, it’s essential to analyse each provider’s track record and trading approach. On Deriv Nakala, you’ll find comprehensive metrics designed to help users make informed decisions:

• Return history: Visualise how the provider’s returns have changed over time. Consistent, steady returns are often a positive indicator.
• Realised return: Shows the percentage gain or loss from trades that have been closed. This reflects actual, banked performance rather than open positions.
• Live return: Represents the current return level, including both open and closed trades—helpful for real-time assessment.
• Unrealised P/L: Indicates profit or loss from trades that are still open and not yet settled. High unrealised P/L adds risk if positions are volatile.
• Realised P/L: The total profit or loss the provider has locked in from closed trades. This is a key measure of real-world success.
• Equity: The real-time value of the provider’s account, factoring in both balance and floating P/L. Falling equity may signal increased risk.
• Balance: The amount remaining in the provider’s account from closed trades only. Comparing balance and equity helps highlight the risk of open positions.
• Leverage max drawdown: Shows the biggest historical decline in account equity as a percentage, reflecting both risk and use of leverage.
• Trades: The total number of trades made, giving you an idea of the provider’s trading frequency and style.

By understanding and comparing these metrics, you’ll be better equipped to select a provider who matches your preferred risk level and trading goals.

Evaluating the trading style of a strategy provider

Every strategy provider has their unique way of trading. Here are key aspects to consider:

• Long-term vs. short-term: Some providers focus on multiple trades per day (scalping or day trading), while others prefer holding trades for weeks or months.
• Risk-seeking vs. conservative: Aggressive providers may pursue higher returns but usually with greater risk, while conservative providers emphasise capital preservation.
• Alignment with your goals: Does the provider’s strategy match your risk appetite, investment size, and financial objectives? Remember, what works for one user may not suit another.

Risk assessment and diversification for copy trading

A cornerstone of effective copy trading is risk management. Even if you are not the one manually placing trades, there are steps you can take to manage the risks associated with trading. A few best practices include: 

• Allocate funds across multiple providers: Diversifying lowers the potential impact of poor performance from any single provider.
• Set copy limits and stop-losses: Deriv Nakala allows you to define how much you’re willing to invest with each provider. You can choose whether you wish to have a fixed trade size, mirror master size or have your trades placed proportional to your equity. You can also establish soft and hard drawdown limits to either stop your account from copying new trades (soft drawdown limit) or close all positions (hard drawdown limits) to mitigate risks.
• Monitor provider behaviour: Sudden changes—such as large drawdowns or highly leveraged trades—may signal increased risk.
• Regular performance check-ins: Schedule time to review your results and adjust your exposure as needed.

Best practices for new copy traders

• Start Small, Scale Gradually: Begin with a modest amount and increase exposure only after you’re comfortable with a provider’s performance.
• Continuous Learning: Markets evolve—keep informed and refine your approach regularly.
• Stay Engaged: Even with risk management tools, no strategy is set-and-forget; active monitoring remains vital.

Choosing the right strategy provider and managing your risks effectively on Deriv Nakala are essential steps towards building a successful copy trading journey. By taking the time to analyse provider metrics, assess trading styles, and utilise the platform’s suite of risk management features, you’ll set yourself up for a safer and more rewarding experience. Remember, steady success in copy trading is achieved by staying informed, diversifying wisely, and regularly reviewing your strategies. With careful planning and ongoing vigilance, you can make the most of the opportunities that Deriv Nakala has to offer.