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When you copy a wallet, you will always buy after they buy and sell after they sell. This delay often results in worse entry and exit prices for your trade, which can reduce profits or even lead to losses, especially in fast-moving markets.
There are several factors to consider:
Price Movement Due to Liquidity:
If the wallet you are copying trades small liquidity or low market cap tokens in large amounts, their purchase can push the price up significantly. By the time you enter the trade, the price is already higher.
Copy Trader Competition:
Popular wallets, especially those in the top 50 on tools like GM Smart Money, often have many copy traders. If 10+ people copy the same trade, the increased demand can further drive up the price before your trade is processed.
Being first in line for these trades can be expensive due to higher fees, so most copy traders end up entering later in the queue, further increasing the price.
Multiple Buy Orders:
The wallet may have already been holding a position in the token and added to it, making their overall percentage gain appear higher than yours since they entered at a lower price initially.
Bots and Farming:
Traders or bots using MEV (Maximum Extractable Value) strategies may execute trades within seconds, giving them a competitive edge. Always check trade timestamps in tools like GMGN to confirm that the wallet you are copying held their position long enough to avoid farming behaviour.
Win Rate Manipulation:
Be cautious when relying on win rate statistics. Some traders avoid selling at a loss to maintain high win rate numbers, which doesn’t reflect their true profitability.
Always analyze trades carefully. Use tools like GMGN to check buy and sell timestamps, holding duration, and trade patterns to understand how the wallet operates. Copy trading isn’t always exact, and it is important to manage expectations about entry prices and timing differences.
