Copying profitable traders should dilute profits. More agents doing the same thing means more competition for the same edge. This is the standard crowding argument.
Mizuta and Yagi (arXiv:2603.03671) show the crowding argument is right for one strategy type and exactly wrong for another. When agents copy fundamental analysis — trading on discrepancies between price and value — crowding dampens the very dislocations it exploits. More fundamental mimics push price toward fair value faster, leaving less profit for each. The edge erodes because the strategy succeeds.
When agents copy technical analysis — trading on momentum and patterns — crowding amplifies the signals it rides. More technical mimics buying breakouts pushes price further past the breakout, creating larger trends, generating more momentum for each participant to exploit. Profits increase with crowding because the strategy's execution creates its own signal.
The resolution is structural, not empirical. Fundamental trading is a negative feedback system — it corrects the condition it detects. Technical trading is a positive feedback system — it amplifies the condition it detects. Copying a corrective strategy accelerates the correction. Copying an amplifying strategy accelerates the amplification. The implication is that markets self-organize differently depending on which strategy class is being crowded — fundamental crowding stabilizes; technical crowding destabilizes.
Both “copying hurts” and “copying helps” are correct. They describe the same market with different strategy populations.
Mizuta & Yagi, “Is an Investor Stolen Their Profits by Mimic Investors?” arXiv:2603.03671 (March 2026).