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Overleveraged Traders

Learn which metrics actually matter—Sharpe Ratio and Maximum Drawdown—not the popularity metrics eToro displays

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We rank eToro traders using the metrics institutional investors care about (Sharpe Ratio, Maximum Drawdown)—not the popularity metrics eToro displays.

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The Problem with Copy Trading Platforms

Copy trading platforms (like eToro) show you trader statistics, but they display them without context. A trader showing 300% returns might be one bad move away from losing everything. Another trader showing 20% returns might be genuinely safer. The numbers look confusing because no one explains what actually matters.

CopyTrader breaks down:

  • Which metrics matter (Sharpe Ratio, Maximum Drawdown) and which are marketing noise
  • How to read each number like an institutional trader does
  • Red flags that separate real skill from dangerous overleveraging
  • Real comparisons showing why boring, consistent trader beats exciting, risky trader

This is your decoder ring for trading statistics. We show you exactly what to look for and what to ignore.

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Three Things You Need to Know Before Copying Anyone

1. Not All Returns Are Created Equal

A trader with 100% annual returns using 10:1 leverage is not better than a trader with 30% returns using no leverage. The first one is one bad day away from total loss. The second one is sleeping soundly.

2. Popularity Is a Red Flag, Not a Green One

The trader with 50,000 copiers isn't necessarily the best—they're just the most visible. In fact, extreme popularity can hurt you because your orders get slowed down (execution slippage).

3. The Worst Loss Matters More Than the Best Gain

If you copy someone with a -50% maximum drawdown, your account will drop 50% at some point. If you panic and sell (which most people do), you've locked in that loss. A trader with -15% maximum drawdown is far safer, even with lower total returns.

The Four Metrics That Actually Matter

Skip the marketing speak. These four numbers tell you everything:

1. Sharpe Ratio (The Most Important One)

What it means:

Profit earned per unit of risk taken.

Think of it like this: Two drivers both reach their destination in the same time. Driver A swerves constantly, nearly crashes twice. Driver B drives smoothly. Driver B has a higher Sharpe Ratio. Same destination, way less stress.

Score Guide:

Below 0.75Risky trading style
0.75–1.0Good, solid trader
1.0–2.0Excellent, skilled trader
2.0+Outstanding (rare)

Why it matters

When two traders have similar returns, the one with the higher Sharpe Ratio gives you the same profit with fewer panic moments.

2. Maximum Drawdown (MDD) (Your Worst-Case Scenario)

What it means:

The biggest loss this trader has ever experienced in a single losing streak.

Example: A trader's account goes from $100k to $70k. Their maximum drawdown is -30%.

Score Guide:

-5% to -15%Excellent, very conservative
-15% to -30%Good, acceptable risk
-30% to -50%High risk (big dips)
-50%+Extreme risk
3. Return on Investment (ROI) (But with Context)

What it means:

The overall percentage gain or loss over a time period.

Important: ROI is useless alone.

A +500% return could mean genius or reckless overleveraging.

Better approach:

  • Only compare ROI over the same timeframe (minimum 12 months)
  • A +5% monthly return compounds to ~79.6% yearly (not 60%)
  • Red flag: +300% after a -50% loss the prior year = just recovering, not skill

The real question:

Did they earn 50% returns with low drawdowns, or 50% returns with an overleveraged tightrope? The Sharpe Ratio answers this.

4. Risk Score (Current Temperature Check)

What it means:

Is this trader overleveraged right now? Updated daily.

Score Guide:

0–2Very conservative
3–5Moderate, balanced
6–7Aggressive, but manageable
8–10Extreme risk, overleveraged
Top Ranked Traders (Preview)

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Institutional Metrics

Sharpe Ratio, Max Drawdown, Win Rate—metrics pros actually use

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Quick FAQ

What makes a good trader to copy?

Sharpe Ratio above 1.0, Maximum Drawdown under -30%, and at least 12 months of consistent performance. These metrics reveal skill, not luck.

How do I avoid losing money copy trading?

Ignore follower counts and short-term gains. Focus on Maximum Drawdown—it shows the worst loss you'll experience. Can you handle it emotionally? If not, pick someone with lower drawdown.

Why are high returns dangerous?

Returns over 100% annually almost always require extreme leverage. One bad move can wipe out your entire investment. It's not skill—it's risk.

What's the best metric to compare traders?

Sharpe Ratio. It measures returns relative to risk, letting you compare traders fairly regardless of their strategy type.