The Binance leaderboard is often promoted on social media as an opportunity to make easy money. We at Diabolo have tested it for you and compiled our impressions in this article. Watch out for the pitfalls and what to know before venturing into all of this.
The Trader’s Casino
Arriving on the Binance leaderboard, we are immediately impressed by the performance displayed. This is particularly the case for the 3 “best” traders. We are still talking about a gain of 1743% this week for the first!
Looking more closely at the third in the ranking, we notice some very interesting elements that are not visible from the home page of the leaderboard.
Indeed, the data is much less appealing. We see a performance over the current month of -36.67% and 94,903.65 USD in losses.
Before thinking about copying someone on the leaderboard, it is therefore necessary to check that the trader has a profitable strategy over the long term. This involves checking the consistency between the profit made in recent weeks and the total profit of the account.
For example, if we look at the second best trader this time, we can realize one thing. His total win over the week is greater than his total win. This is a first sign that should warn you.
Fake accounts dedicated to pump and dump
Followers can be attracted to accounts with strong results and copy their trades. If they are successful, they can then train many other people with them. This can cause an artificial rise in prices, a pump and dump phenomenon.
The trader only has to sell his positions a few minutes after having initiated a trade with another account on which he will have bought the cryptocurrency of the trade in order to collect quick and easy gains at the expense of those who follow him.
Accordingly, it is important to pay attention to the number of followers of an account. If the trader has more than 1000 followers, it can mean a significant risk of upward price manipulation on each position.
Traders using high leverage
Another important point to monitor: traders carrying out operations with high leverage.
Indeed, the latter have a significant risk of greatly reducing your capital at the slightest error… And even if he succeeds in his trade, which is the best case scenario, you will not have the same result if you do not know how correctly configure the follow-up for the case of the levers.
For the safety of your capital, prefer traders using little leverage.
Risk management and drawdown
Many of the accounts on the leaderboard are not professional traders, far from it. They must therefore be analyzed in depth over time to see if risk management and drawdown are still under control. A trader who loses more than 20% of his capital in one week is a trader who does not know the fundamentals of this field. diabolo advises you to move on, he won’t make it in the long run.
To conclude
Diabolo considers the consistency of performance as a crucial aspect for the selection of traders. This is why the team analyzes all the strategies offered on Binance in depth and by following the various points mentioned during this article before integrating them into the Diabolo.io platform. Because the gain is an important value, but making sure to last over time and not run out of steam is even better. This is why our teams apply their knowledge of trading in order to select the best for their clients.
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