How to Choose a Master Trader to Magnify Profits (Complete Guide)

Copy trading is one of the best ways for traders to emulate the success of established traders and earn profits on par with these market gurus. A well-established strategy in traditional finance, copy trading has also proved itself to be a popular tool in the crypto market. In copy trading, there is perhaps no element more important than choosing the right Master Trader. This choice will make or break your crypto copy trading. Read on to learn all about copy trading and Master Traders to get the most out of your trading.

What Is Copy Trading?

Copy trading is a popular trading strategy whereby a novice trader or follower replicates orders placed by an established trader with a track record of positive returns, known as a Master Trader. You can choose to manually copy a Master Trader’s strategy, or simply use automated software to copy their orders. For example, Bybit offers you a convenient platform for easy and flexible automated crypto copy trading where you can freely communicate with top-tier Master Traders.

Copy trading is often compared to — or even confused with — mirror trading, which is largely a similar strategy in which you precisely follow the market moves of an established trader in an automated fashion. The key difference between copy trading and mirror trading is that the former leaves you room for applying your own customization and judgment when replicating the market moves of your chosen trader. Meanwhile, mirror trading mandates following the trader’s moves exactly, even when you disagree with a particular order or strategy.

With copy trading, beginners can become profitable even without deep knowledge of the market and trading methodologies. It’s also a great time saver, as nearly all of it is automated, and relies on the established trader’s moves. Copy trading, similar to other automated trading strategies, also removes the element of emotion from your decisions and performance.

An experienced trader who would like to share their knowledge and trading strategy with others can become a Master Trader. In doing so, they also earn additional profits from their dedicated followers, since no one acts as a copy trading master without being reimbursed for it.

Currently, Bybit supports crypto copy trading only for the Derivatives markets. Traders whose strategies are followed earn 10% fees on profits generated by their followers.

Who Is a Master Trader in Copy Trading?

A Master Trader is a trader whose strategies and moves are being copied by others, known as followers. Master Traders have a track record of great performance and positive returns. You wouldn’t want to copy their trades otherwise, would you? They don’t necessarily need to be the biggest names in the market, or have millions of traders following them on social media. Massive fame and celebrity-like status are, thankfully, not a requirement. Great Master Traders often maintain low profiles but deliver results in terms of profitability and win rates.

How Do Master Traders Earn Profits?

The primary profit source for Master Traders in copy trading comes from the fees charged on their followers’ returns. Because copy trading is automated, attributing the profits earned by a follower to a specific Master Trader is easy. As noted above, Master Traders on Bybit earn a 10% fee on followers’ returns.

In addition to this main profit source, Master Traders also benefit from their activity indirectly by creating a follower base, a great reputational benefit for any trader.

How to Choose a Master Trader on Bybit

Choosing a good Master Trader (MT) is undoubtedly going to be the key element in your copy trading strategy, particularly if you’re a novice trader. 

To begin, familiarize yourself with the four categories on the Master Trader page, tailored to different risk appetites: 

Top Traders by ROI — Those willing to take high risks for high rewards in the short term

Traders With the Highest Profit for Followers — Traders looking for long-term consistent profitability

Lowest Drawdown — More conservative traders seeking greater risk and capital management

Top Intraday Traders — Day traders

Grasping these distinctions can help you align your risk appetite with the trading approaches of the top MTs, resulting in a smoother copy trading journey and higher chances of success.

High Risk, High Reward in the Short Term

The Top Traders by ROI category appeals to those seeking significant returns in the short term. Master Traders in this grouphave achieved the highest ROI in the last seven days, thereby indicating that they may possess excellent trading skills or have made some high-risk, high-reward trades. 

However, it's important to recognize that high short-term ROI doesn't necessarily guarantee long-term sustained profitability.

Long-Term Consistent Profitability

If you’re looking at long-term consistent profitability, the section entitled Traders With the Highest Profit for Followers showcases Master Traders who have earned the highest profits (in USDT) for their followers. Consistent profitability indicates that these MTs could produce reliable profits. 

Nevertheless, past performance doesn’t guarantee future results, and you should still exercise caution by assessing the Master Trader's abilities and the risks involved.

Enhanced Risk and Capital Management

For more risk-averse traders, the Lowest Drawdown category is ideal, consisting of Master Traders who have achieved an ROI of over 10% and a maximum drawdown of less than 20% in the last 30 days. These MTs typically demonstrate better risk management strategies and capital management abilities, making them more attractive to conservative traders who prioritize preserving their capital.

Day Trading

The Top Intraday Traders section caters to those interested in day trading. MTs in this group are intraday traders who have achieved an ROI of over 20% and a win rate of more than 20% in the last seven days. Their high returns within a short period — coupled with a higher success rate — suggest that they possess good market insights and quick decision-making abilities suited for intraday trading.

Tips on Choosing the Best Master Trader for You

While Bybit already helps you filter out the top traders according to your risk appetite, here are some tips that will help you make an informed decision when choosing a Master Trader.

Profit and Loss

The overall profit and loss figures for a trader over a long-term period are the critical indicators to look at. There’s no point in following an MT who isn’t posting solid return figures.

Besides the overall return figures, it pays to look at the 7-day profit and loss (P/L) ratio. This measure will tell you how successful a trader has been in the most recent period. For instance, a P/L ratio of 100:1 indicates that over the last 7-day period, the Master Trader has lost $1 for every $100 earned.

Followers & Community

On most copy trading platforms, you can view the total profit each Master Trader has helped their followers to earn. This is referred to as cumulative profit. Since profit is cumulative, the more followers an MT has, the higher their total profit. A trustworthy Master Trader will have many followers since they’ve proven their success in trading over a long period.

Trading Volume

A Master Trader’s overall trading volume is also useful data. It may reveal both Master Traders who are very active and consistent (high trading volumes), as well as those who are more efficient (lower volumes coupled with higher total profits).

Trading History

Perusing a Master Trader’s past trading history is a great way to gain insight into their style of trading. At the end of the day, you’ll need to be comfortable with the trading style, including the risk tolerance, of your chosen Master Trader.

Who Can Be a Master Trader?

Any trader who develops the ability to consistently and reliably turn a profit might be a candidate to be an Master Trader. To become a successful trader whom others want to copy, you‘ll need to master the following competencies.

Technical Analysis Proficiency

Master Traders have to be well-versed in the key techniques of technical analysis in order to analyze crypto price patterns and trends.

Fundamental Analysis Skills

While reliance on technical analysis of price charts is essential, it isn’t sufficient to become successful. Master Traders also need to understand fundamental analysis of the crypto market in order to stay on top of industry developments, and to target asset specifics, environmental and political factors, and more.

Ability to Adapt Trading Strategy to Market Changes

The crypto market in particular is characterized by its volatile nature. Having strategies to successfully deal with volatility is key to profitable trading and, in turn, becoming a Master Trader.

Reliable and Long-term Oriented

A Master Trader differs from someone who is simply “good at trading.” A good trader might be in the game for short-term gains. A Master Trader, on the other hand, must instill confidence in their ability to lead their followers. This requires a long-term focus and the ability to earn trust.

Thought Leadership

Great Master Traders aren’t only profitable: They also excel at sharing valuable, qualitative knowledge with their followers — or indeed, with anyone motivated to listen to them online. Online publications, such as market analysis blog posts and industry opinion pieces, are a great way for Master Traders to enhance their reputations as traders worth copying.

Being a Master Trader is a great source of additional profit for experienced traders. At the same time, it creates additional responsibilities. Master Traders on most platforms, including Bybit, may be subject to penalties if caught in any form of malicious master trading.

How to Be a Master Trader on Bybit

Derivatives Copy Trading

To become a Master Trader in Derivatives, the first prerequisite is that you must not be following another Master Trader. You can also register only one Derivatives Master Trader account, and need to deposit a minimum of $100 or equivalent to start.

Bybit has a Gear Up program for aspiring Master Traders to graduate into full Master Trader after completing the induction program. Under the Gear Up program, you first submit your application, become prequalified, and then graduate into a full Master Trader by completing a set of compulsory tasks. These include a minimum of three trades with a profit of at least 50 USDT, reading the penalties for malicious traders, and joining the platform’s Telegram group.

As a Derivatives Master Trader, you can place your trades via either the Derivatives Copy Trading or Derivatives Trading page. In either case, you’ll need to transfer the funds required for your trades from your main Derivatives account to your Copy Trading account. You’ll be able to specify options for your trading pair, trade direction (long or short), order type (limit or market), order price for limit orders, and leverage.

Conclusion

Copy trading is a great way for novice crypto traders to become profitable from Day One of their trading activities by following an established Master Trader. More experienced followers can also improve their returns and save time by adopting copy trading. For Master Traders, copy trading represents a great avenue for additional profits. Thus, no matter your trading experience or success rate, you can reap significant benefits from copy trading.

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