When a lead trader opens, modifies, or closes a position, the same action is triggered in the follower's account. Trade size is adjusted based on the amount of capital the follower has allocated to copying.
Execution is not always identical. Differences in timing, liquidity, and market volatility can lead to variations in entry and exit prices.
Followers usually decide how much capital to allocate and may have the ability to set limits such as maximum drawdown or stop-copy rules. These controls are critical for managing downside risk.
Copy trading is a participation tool, not a performance guarantee. Understanding how trades are executed helps users set realistic expectations and manage risk responsibly.
Automation tools do not eliminate risk. Users should fully understand strategies before enabling automated trading.