--- title: 'How to Avoid Losses in Copy Trading: Drawdown Analysis and Risk Management' source: 'https://youtube.com/watch?v=57jLEvkOIgo' video_id: '57jLEvkOIgo' date: 2026-07-13 duration_sec: 801 --- # How to Avoid Losses in Copy Trading: Drawdown Analysis and Risk Management > Source: [How to Avoid Losses in Copy Trading: Drawdown Analysis and Risk Management](https://youtube.com/watch?v=57jLEvkOIgo) ## Summary This video explains how to evaluate copy trading strategies on crypto platforms by analyzing drawdowns and using mock trading. The speaker warns against excessive leverage and provides a method to calculate actual risk using historical data and ChatGPT. ### Key Points - **Selecting Timeframes for Analysis** [00:17] — The speaker selects 90-day, 180-day, 7-day, and 30-day periods to evaluate a trader's performance, noting ROI and drawdown percentages. - **Cause of Losses: Excessive Leverage** [01:41] — The main reason for losses in copy trading is identified as excessive leverage, leading to high drawdowns. - **Focus on Worst-Case Scenario** [02:09] — Instead of peak profits, the speaker emphasizes calculating the maximum loss from the worst entry point to the lowest point. - **Using ChatGPT for Drawdown Calculation** [03:45] — The speaker demonstrates how to use ChatGPT to calculate the percentage loss from a given entry point by providing portfolio snapshots. - **Mock Trading and Small Amounts** [06:05] — Recommends using mock trading or small amounts to test a trader before committing real funds. - **Selecting 180 Days and DD Option** [07:09] — Advises selecting 180 days and the DD (drawdown) option to see the maximum loss a trader has experienced and recovered from. - **Stop Loss Settings** [09:11] — Discusses setting stop losses based on the trader's drawdown, e.g., if drawdown is 30%, set stop loss at 50%. - **Fixed Leverage for Safety** [10:24] — Suggests using fixed leverage lower than the trader's (e.g., 3x instead of 10x) to reduce risk and limit losses. - **Risk Management with Leverage** [11:08] — If a trader loses 100%, using lower leverage (e.g., 2x) caps your loss at 20%, preserving capital. ### Conclusion The key to safe copy trading is to analyze drawdowns, use lower leverage, and test strategies with mock trading before investing real money. ## Transcript coming to the top. A lot of people are recommending it. Ok? But the copyists here are suffering huge losses due to this. Ok? Now we still have to see what scene this is, friend? Can this be of any benefit to us or not? Ok? Now first of all look here, we have selected it from 90 days, look here, we have selected it from 90 days, so here the ROI is 53% and its draw down is 26%. Drawdown means the account went down to minus 26%. Ok? Once it went down to 26% and then came into profit. Ok ? And if we extend it to 180 days, there is approximately 200% profit here and the drawdown is still 26%. Ok? After that we do it for 7 days. If you want to catch any trader then you have to see that if you had followed him 7 days ago then you would have got around 13% or 14% profit here and the draw down would have been less than 1%. Ok? Now do this on 30 days, so if you had done this 30 days ago, then it was in profit 30 days ago and from profit it went down to a huge loss and after that it came up here and recovered the loss and there would have been a minus of 8%. Ok? After that, this 90 day plan is coming to you. Ok? So now after looking at its graph here, we are not able to understand that it was going well. Ok? Here it means that the person who followed in these places would have made profit. But those people who followed here, for this period of 1 month or some followed here made some profit. Whoever followed here suffered a loss. Ok? He can say that whoever followed here made profit. Ok? Now overall the graph is being formed like this. Now you people have to calculate in this up, when it will go down, sometimes you follow it , sometimes you do not. This cannot happen. Ok? Now, the reason I see for this loss that people have suffered is excessive leverage. Ok? Too much leverage. Ok? What is its session now ? Suppose we have to follow this guy, any guy like this. So what should we do so that this thing that happened to us does not happen again? Ok? And in these matters, these ups and downs, we should remain safe or suffer less losses, it should not happen that we get finished because this is future trading. Ok? Now what we need to understand inside this is this. We don't even say that we followed from here. There was profit here. We only talk about the worst of the worst. From the worst to the worst, suppose you followed this on this day and how much loss would you have incurred till this day. Ok? How do you understand this? Like I have brought it here. Ok? So you can see here that it was the 26th. It was the second month and the profit here was 1166%. But it was nothing to you. You started zero there. You started zero there. Ok? And here it is approximately 1 26 and no, these approximately 8-10 days are yours. In 810 days it reached 828. Ok? So we have to pay attention that brother, if you put $ here then how much is left with you till here. Ok? Because this is its entire past history, rather I will open it for 180 days. Within its 180 days, we are seeing only two issues. One this one and one this one. After that there are small ones. So if we calculate these two issues. Ok? And we can make our strategy based on such a person that people may suffer losses. This guy may also suffer a loss. We This guy may also suffer a loss. We either have minimum loss or we have profit stay safe because of course I am discouraging you from future trading but still many people are doing it here. So I want to tell you how you can do it better. Ok? Now here we will not calculate it, here I will take it for 90 days so that I can see it properly, rather I will try to make it even smaller. 30 days good, it does n't look right in 30 days, only 90 days. n't look right in 30 days, only 90 days. Ok? Okay, now we calculate it. Ok? You have learned the easy way to calculate this inside Chat GPT. Ok? And I gave these two pictures to Chat GPT in which this mark is also appearing here. And I said that friend, if I had invested money here, then what would have happened till this date, this percentage. Ok ? I have written this to him, look, this. You can also do this thing. Ok? Anyway, can you calculate what percentage of 1166 you are making? 828. Ok ? Ok? If you calculate its percentage, you will realise that this is how the percentage is being generated. The rest is loss. Ok? Or you can calculate the difference. Subtract 828 from 1166. Whatever remains. Ok? You can calculate what percentage it is of 1166. Ok? But there is an easy way to do this, I have given an example of the portfolio of a copy trader which was this much on this date. Ok? I followed him on this date. Ok? And now later it became so much. Ok? So tell me what will be my scene? So what he actually told me is that by March 3, you will have approximately a 29% loss. Ok? That is, it was understood that if we had invested the gap of $ here, then if we had invested the gap of $ here, then Ok? Account means zero, still he would not have been there. Ok? Now this thing has happened. Now let us try to calculate the gap behind it here also. This one is Joe, right? This was right here, let's say 600 643, 56 right here. Ok? So here it can also do it on a calculator. Ok? The easy thing is that whatever you ask Chat GP, it tells you easily. There is a difference of approximately 13% here. Ok? So brother, if you were minus here, it would be 13%, if you were minus here, it would be 31% minus. Other than that you are safe. Ok? Now one thing is clear that from the beginning till the end, this guy's scenario is going on in his portfolio. Ok? And here you can clearly see that if you had followed 180 days ago, you would have made 204% profit. Ok? If you had followed the 90 days 3 months ago, you would have made 50% profit. If you had followed 30 days ago, you would have been in minus 8% right now. And if you had followed it a week ago, you would have made 13-14% profit. Ok? Now this is one thing that has happened. Now suppose we feel that this guy is okay. Now the easy way to do this is to turn on mock trading. Ok? Like if I click on copy it, then I have already made its mock on. Ok? So he is telling me that he will convert it. Ok? So, you will see the option of Mock Trading here, trading. You can test it. Secondly, you can also try it with a smaller amount. But this guy's amount has increased. Ok? The minimum amount we see here is $500. Ok? Of course, big traders try it for you but right now I have it turned on only in mock. Now this thing that I have told you, isn't it correct? Now this thing that we have calculated drawdown and so on. Ok? This is not this guy's, we emptied it. I have told you a method that you have to calculate the actual drawdown in this way. that you have to calculate the actual drawdown in this way. Now actually in the last 180 Now actually in the last 180 days this guy has gone up to -31%. Whereas here it is showing 26%. So you did not go over the things written here. You have to calculate it yourself. Ok ? This thing happened. Apart from that, now told these things before. Let me tell you again here what you have to do ? Here you have to select 180 days. Ok ? After that you have to select DD here. Ok? DD is the maximum loss he incurred after going and returning. Ok? So you see these guys. Ok? Now looking at the graph of this guy, it seems that he has less days left. This also has fewer days. In this way you have to keep taking it down. That It has a slightly longer graph. So it might have been a few days since he joined but still it is not that much, it has been at least 2 months. Ok? So what is the scene and what is not. Ok ? Now let me tell you further how to follow when you have to do it. Ok? By doing this search, this guy became like this guy how it appears to us. Ok? We can see this also. Now its scenario is We can see this also. Now its scenario is that it has made almost 100% profit in 180 days. Ok? And it was made in 7 days. I couldn't feel like it. There is a slight loss going on. It has made a 3% profit within 30 days. Ok? Within 90 days, it has to make 17% profit in three months. Ok ? He is a big trader. So Now it seems right for 6 months. But looking at its graph it seems okay. That means the guy is being very smooth and studious. not much loss. But these are for the big traders. Ok? 200 is its minimum. Ok? And now see, many people have followed it. Ok. Now I am not saying that the guy is okay. Whichever one seems right, you have to turn it on click on copy then my mock trading is already on. Ok I have already added it to my favourites. I am monitoring them. Now suppose what do you want to see? You have to see their draw which I have always drowned. Ok? This is drawn and has to be see the guy with the draw. Not seeing that the profit is so much, there is a 50% draw. This means that if the person has come back with 50% minus then he can follow someone, suppose I click on its copy. Ok? I convert this and try to copy it. Ok? So you have to write down the amount here, the minimum amount for this person is $200. Ok? After that you can also place a stop loss. But stop loss is also not recommended because if your trader places a 20% stop loss and comes back after losing 20% ​​to 25%, then your 20% will be booked again. Its advantage will be that you will have only 20% loss. Ok ? And the loss will be that brother, after that if he comes back you will say friend, mine was booked at 20. But the advantage of not placing a stop loss would be that if it hits 20% and comes back, then you apply it. But if the stop loss is not placed and it goes below 20% and becomes zero, then you will say, I wish I had placed it. So this is the thing in all situations. But in this, you have to place such a stop loss that you feel that a person cannot go below 10%. If that guy goes to 20% then understand that the work is bad, then you can impose it on him. Suppose a person's drawdown is 30%, then you can place his stop loss at 50%. Ok? But you should follow only such a person who does not take you to your condition in that situation. Ok ? After that, here you have to click on Advanced Settings. remain like this. Ok? This leverage is there, you can apply it as per your wish Click here and click on Fixed Leverage. Ok? here comes the. Now here this guy is doing 20x , I don't know, he is doing 30x. You will understand by looking at its order. Ok? But you do the minimum. If that person's leverage is 10 then you make it five. Ok? Initially, to check the start, you can keep two , you can keep three. Ok? So I put this three here. Ok? What will happen in that is that the guy will open a trade with 10x. I will have 3x key open. Ok ? Similarly, if that person assumes that he will have a profit of $10. You will make a profit of $3. He will lose $10. You will lose $3. Ok? His account will be completely washed out. Ok? So your account will stop at minus 33%. Did you understand what I said? Under this method, if I ever suffered a 100% loss from any trader whom I followed, then my maximum would have been 2%, so I would have had a minus of 20%. That means, suppose his $ is completely gone and the trader is left with 80 out of my $. Ok? So this is a safety. After that you can do this also. But this has to be done according to the trader. using? If so, he is doing the same order. He is completing each order one by one. If he is doing this, he is using placing an order. The next order is bigger than that, the next order is bigger than that, just like we do in DCM. Then this thing is not right. Otherwise, if he places a single order, he closes it and Then you can do this thing that you can charge on the order. Ok? That whoever places an order, what percentage of amount you mean in it. Like you have 100%. If it is $ then you can set it here as 5%. Ok? So your trade will be placed here at 5% of 100 i.e. $5. It will be played according to you. It will be charged according to your balance. Even if the other person is trading with 10% of his balance, yours will be charged at 5%. So some strategies will be beneficial. Some will not. Now, there are all these small settings above copy trading, there is also the setting for auto invest making videos on this. But I have just told you the basics of how to check drawdown. Ok? After that you have to apply minimum leverage. I have told you these things that brother, if you are not refraining from future trading and copy trading, then you can stay safe by doing this setting. What will happen is that he is making 100% profit in a month. Ok? You have used it 10x. 100% profit is being made. You are using 3x. You will get 30% profit. But his account got washed away. Your account was not washed. Ok? This is its advantage. Ok? If you liked the video, please like it. And you can share about it below with the traders you are following and you like. Ok? I have told you one method. Under this method you can eliminate many traders. Ok? There are many more options here. For example, instead of MDDD, you can select ROI. Ok? Now you have to check the many traders who will come here. you have to be satisfied with it and then you have to follow it in the demo also. Ok? Let's you have to follow it in the demo also. Ok? Let's go Allah Hafiz.