Guide to Copy Trading for Copied Traders
1. How to become a copied trader
1.1 Onboarding as a registered trader
<1> You have registered for a Huobi account.
<2> You must apply to be a copy trading trader: Click "Become a Trader" on the "Copy Trading" page (Huobi website >> "Futures" in the upper navigation menu >> Copy Trading) and fill in the application form. You will become a registered trader on Huobi if your application is approved. We will notify you of the results via email and Telegram.
Note 1: In copy trading, a follower copies all of the trader's positions until the account runs out of funds, regardless of the copy units, leverage, and position limit for a single order.
Note 2: A trader cannot follow other traders.
a. Go to Futures >> Copy Trading, click "Become a Trader" and fill in the application form
b. After your application is approved: Go to Copy Trading page >> click Trader Info >> Enable Trader Mode
c. Set parameters and sign the Registered Trader Agreement. You can now trade to earn profits.
1.2 Trader's margin
This refers to the margin in the copied trader's USDT-margined futures account. Traders can add to or reduce the margin at any time.
2. Copy trading explained
2.1 Applicable futures products
At present, copy trading supports BTC and ETH futures products. More symbols will be added going forward.
2.2 API trading
When you make API trades and your positions have changed accordingly, these changes will be copied simultaneously by your followers.
2.3 Copy trading parameters
You may set parameters for the copy-trading after you have enabled the Trader Mode (Copy Trading >> Trader Info >> Enable Trader Mode). The settings include profit-sharing ratio and copy unit, and take effect immediately after being set.
<1>Profit Sharing percentages: You may select one from 10%, 15%, 20%, and 25%.
<2>Copy Unit (USDT): Minimum principal amount of a copy trade. Followers and copied traders have the same number of copy units in a copy trading relationship. For example, a copied trader has set their copy unit at 20 USDT and a follower user has set their copy unit at 10 USDT. If the copied trader opens a position with 2 units (2 * 20 = 40 USDT in principal), then the follower shall also open a position with 2 units (2 * 10 = 20 USDT).
Note: A position may be opened with more than one copy unit. You are advised to set a moderate copy unit size to better manage the overall position.
2.4 Copy trading statistics
Today's Profits (USDT): The sum of daily profit-sharing contributed by your followers
Total Profits (USDT): The total profit-sharing amount accumulated
Copied: The total number of copy trades made after the Trader Mode is enabled.
Followers: The total number of your current copy trading followers.
Trading days: The trading-day counts since the first copy-trade after the Trader Mode is enabled.
PnL Ratio: The current profit/loss ratio.
Win Rate: The to-date ratio of the number of profitable trades divided by the number of total trades since the beginning of copy trading.
Fund Flows: The detailed amounts and time of profit-sharing entries
2.5 Risk management
<1> There is a Position Limit for trading futures in Copy Trading. When the combined futures positions of the trader and the followers reach the set position limit, a new order for opening a position will no longer be copied by the followers.
<2> Traders may customize the margin leverage within the trading pair's allowable leverage range. Once the leverage is set and the Trader Moder is enabled, the leverage cannot be adjusted.
<3> Traders and followers should choose the cross-margin mode for the moment.
3. Profit sharing
After a follower has closed his/her positions, being either a self-initiated closing or a copy-trade closing, a portion of the realized profits will be shared with the copied trader immediately according to the trader's preset percentage.
If a follower unfollows a trader, the follower's copy-trading positions will be immediately closed. A portion of any realized profits will be shared with the copied trader according to the trader's preset percentage.
Profit-sharing ratio: A trader needs to set this parameter when enabling the Trader Mode.
4.1 Why is the trader's PnL ratio different from that of the followers'?
<1> The differences in principals between a trader and a follower can lead to different PnL ratios. When a follower runs out of available funds, he/she will be unable to copy the trader's subsequent long orders.
In a copy-trading relationship, a follower copies any orders placed by the trader until the follower's funds are used up. If a follower's funds have been taken up by the trader's existing positions and orders, this follower will then be unable to copy the trader's subsequent long orders.
<2> When a trader holds both long and short positions of the same contract (Hedge mode), the follower's position only synchronizes the trader's net position changes instead of copying all orders made under the long and short positions.
<3> If a trader already holds a position of a symbol and is then followed by a follower, should the trader add to the position, the trader and the follower will have different entry prices and therefore different profit ratios.
For example, a trader longs one BTC contract at the price of 20,000 USDT and another at 22,000 USDT, resulting in an average entry price of 21,000 USDT. A follower follows this trader sometime between the two orders and only copies the second order: long one BTC contract at 22,000 USDT. When the BTC price falls to 21,500 USDT and the trader closes positions, the trader earns 1,000 USDT (2*(21,500-21,000)) while the follower loses 1,000 USDT (22,000-21,000).
<4> A follower has set leverage for copy trading, resulting in different yields between the follower and the trader after their positions are closed.
4.2 How is a trader's PnL ratio calculated?
PnL ratio formula:
A trader's PnL ratio= Total PnL / total principal
Total PnL= Account balance - total principal - total trading fee - total funding fee
Total principal = beginning balance + total deposits - total withdrawals
Trader A had no starting balance in the copy-trading account, and made 2 deposits, 300 USDT and 500 USDT, to fund it. After some trades were made, the account balance is now 1,200 USDT. Assume a 10 USDT trading fee, 1 USDT funding fee, and long-only position. Trader A's total PnL and PnL ratio is calculated as follows:
Total PnL: 1,200 USDT - 300 USDT - 500 USDT - 10 USDT - 1 USDT = 389 USDT
PnL ratio: 389 USDT/ (300 USDT + 500 USDT) = 48.625%