Copy Trader strategy rankings can be misleading and lead to errors | by Estratégias de negociação e Aprendizado de máquina | May, 2023 | Medium

According to regulated broker Active Traders, around 85% of retail investors end up losing money. This can be the result of several factors, including lack of experience and adequate knowledge about the financial market, as well as emotional and impulsive decision-making. It is important for investors to seek information and educate themselves before investing, in addition to having the help of professionals and reliable platforms to avoid unnecessary losses.

Unfortunately, many Forex brokers make money on customer losses. Therefore, a Copy Trader strategy ranking that promotes high-risk strategies can lead to more clients losing money and, consequently, brokers earning more. It is important for investors to exercise caution when choosing a brokerage and to evaluate the company’s transparency and regulatory policies before investing. In addition, it is essential that investors are aware of the risks involved in the financial market and always seek to improve their knowledge and skills before making investment decisions.

Forex brokers can operate in two different ways: as market brokers or as non-dealing desk brokers.

Market makers are those who create an internal market for their clients, that is, they buy and sell financial assets directly from their clients, assuming the risk of the operation. In this case, the brokerage firm acts as a counterparty in the client’s operations, which means that if the client loses money, the brokerage firm profits and vice versa. This business model is common in smaller brokerages and may present a conflict of interest.

Brokers without a dealing desk, on the other hand, forward their clients’ orders directly to the market, without intermediating the operations. In this case, brokers only charge a commission for intermediating operations and do not assume any risk. This business model is common with larger brokerages and is generally more transparent and reliable for clients.

Risk Return Ranking

In the following example we have the Lieutenant Dan strategy which is in a much lower position than the Supercross strategy . On the other hand, Lieutenant Dan has much more consolidated results and a much smaller relegation/drawdown. Also, Lieutenant Dan ‘s Sharpe index is better than that of the Supercross strategy . In this way, we can assess that the ranking of the platform considers a better strategy to be the one with the highest risk, which can be confusing and does not take into account the consistency of results over time.

See more about Lieutenant Dan and Supercross strategy

However, it is important to point out that a broker without a dealing desk is not always better than one with a dealing desk. What determines the quality of a broker is its regulation, transparency, market reputation and other factors. It is up to the investor to choose a reliable and suitable brokerage firm for his needs and investment profile.

According to regulated broker Active Traders, around 85% of retail investors end up losing money. This can be the result of several factors, including lack of experience and adequate knowledge about the financial market, as well as emotional and impulsive decision-making. It is important for investors to seek information and educate themselves before investing, in addition to having the help of professionals and reliable platforms to avoid unnecessary losses. Unfortunately, many Forex brokers make money on customer losses. Therefore, a Copy Trader strategy ranking that promotes high-risk strategies can lead to more clients losing money and, consequently, brokers earning more. It is important for investors to exercise caution when choosing a brokerage and to evaluate the company’s transparency and regulatory policies before investing. In addition, it is essential that investors are aware of the risks involved in the financial market and always seek to improve their knowledge and skills before making investment decisions. Forex brokers can operate in two different ways: as market brokers or as non-dealing desk brokers. Market makers are those who create an internal market for thei

Origem: Copy Trader strategy rankings can be misleading and lead to errors | by Estratégias de negociação e Aprendizado de máquina | May, 2023 | Medium

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