Are you a novice trader? And, you want to invest like a professional in crypto trading? For beginners, becoming a crypto trader can be daunting. And, considering copy trading is something that will let you invest like an expert.
Now the question is, what is copy trading?
Crypto copy trading is one of the most commonly used trading techniques that allow traders to copy trade positions that were opened by the expert traders automatically. The goal of copy trading is for the novice trader to have the same trades or copy the position as the investor they are copying. When you are copying the trade, you do not receive the layout of the traders’ strategy rather you will be following their trades blindly.
It’s usually a form of portfolio management. The process of copy trading allows traders to monitor the crypto trading strategies of the most successful traders. This kind of trading is useful for those traders who don’t have enough time to follow the market themselves. Generally, it’s focused on short-term trading like day trading strategies, but there are several strategies that can be used here to generate profits.
Copy trading is also known as social trading or mirror trading which involves copying the trades or trading strategies of someone else. Usually, these are experienced traders who generate more profit than losses. So, the novice traders generally copy the trades of experienced traders. It also allows copying the expert trader’s bots, or even the signal providers. Therefore, the copier will get the same results as profit or loss as the expert traders get.
While copy trading seems a lucrative option, there are also some risks involved, and it’s important for a trader to remember that the past success results are not a guarantee of future returns. This kind of trading lets the traders connect with the top performing traders, copying their trades, and earn profits. There are many platforms which offer copy trading services to its traders. These portals allow traders to place stop-loss strategy on the entire copy trading relationship, which allows them to have a complete control over their risks. This kind of trading could be highly confusing for the beginners, but they can choose it to gain extensive insight into the world of crypto trading.
Copy trading allows traders to diversify their portfolio which means that they may use multiple ways to make money in the crypto trading market. Instead of putting all their money into one strategy or position, traders may use multiple strategies. While using copy trading, the traders must consider using a few different trades to copy.
The copy trading bots/software automate the buying and selling of crypto assets by mitigating the original/actual trades of the professional traders. As a crypto trading user, one only needs to deposit some initial amount which could be as low as $50. The trader has to select an expert trader on any of the crypto social trading platform where everything will be automated.
Copy trading could be manual or automatic, but considering the automated one is better. But, if you are a pro trader, you may offer your services via social trading platforms and can earn profit if any trader copies your trade.
How copy trading works?
As discussed above, copy trading makes auto trading easier. In order to get started with copy trading, you need to follow the below steps:
1. Pick the trader- This is an initial step in copy trading where you need to choose the copy trader who has similar goals. This could be done using multiple tools over the crypto copy trading platform. One you discover these tools, the platform will provide you with all the trades available there. Typically, one should look for a trader with many followers along with the total funds they are managing and its returns. Make sure to check the profitability and risk level of the trader before finalizing. Remember, it’s always better to choose a trader who meets your specific criteria.
2. Choose your investment- After picking the trader it’s time to choose the amount to invest in copy trading. Make sure to remain balanced and never invest your entire amount in one trader’s account. If you plan to copy trades of multiple traders, make sure to choose the amount wisely which you will allocate to each trader’s account.
3. Adding funds- If you like the way any trader is placing his/her trades, make sure to add some additional funds to your account. Alternatively, you may also reduce the number of funds which you may be investing in the trader’s account to keep your portfolio diversified.
With copy trading, the traders can enjoy a host of benefits. Copy trading is not dependent on the information of fellow traders rather it is greatly dependent on the behavior of other crypto traders. This type of trading allows a trader to copy the action or decisions of other traders i.e. professional or the expert traders. Make sure to copy the trades using an automated platform.
In this kind of trading, the trader links a portion of their portfolio to the portfolio of another user, and all of their open trades can be copied directly from account to account. Additionally, all the actions taken in the future will also be copied. The copy trader/novice trader who is copying the expert trades can decide how much they want to invest in the trades they are from.
You can also say that with copy trading, you are getting a replica or mirror copy from the copy traders’ real account. Basically, there is a master account i.e. the one from the expert trader which you are copying, and the follower account, i.e. copier. Whenever the master opens, closes, or exits any kind of trade, all the activity will be replicated to the copier account automatically.
That means if he opens any position with 30% of his balance, you will use 30% of your invested amount on the same trade too. Online crypto trading platforms that are using crypto copy trading features often vary a lot in their terms of its use and conditions. Some of them operate as a free market while others may act as an exclusive platform with a number of subscriptions where an investor pays a fee to copy trades on monthly basis. These platforms allow only certain traders into their platform.
Make sure to select the right copy trading platform while considering all the pros and cons of this trading. Remember that you choose a crypto copy trading platform that is integrated with trusted platforms like Binance, KuCoin, etc.
This is all about copy trading. Let’s understand it with an example:
More often, the copy trades are limited to 20% of any trader’s portfolio. Here Trade sums are expressed as a percentage of the trader’s portfolio.
Let’ say, the trader might have $500 in his account. However, if there are no open trades, they can copy successful traders. If the trader is a beginner, it’s important for him to not consider investing in larger amounts. Instead, they should use only 10% or 20%. Let’s say, he considers 10%, i.e. $50 when they choose to copy the trade.
The original trader may have one open trade. This trade will be copied into the copy trader’s account. The $ 50 is actually the percentage amount from the trader’s portfolio. It will be 10% of their portfolio which further exceeds $500.
And, the copy trader would do the same if they conducted trade for $500.
Is copy trading worth it?
Of course yes! But, this is completely dependent on who you copy and how much money you are putting in. Now, if the expert trader you are copying has a low-risk profile, then you can safely put in more money without worrying about losing your investment.
On the other hand, if the trader you are copying makes high-profit margins but having a high-risk profile, then it’s better to consider investing less money. To put into this point of view, copy trading is worth it only if you choose the right trader.
However, it is often beginners who may benefit the most from copy trading, as they are the ones who are most likely to lose money if they were to trade themselves without using proper strategies.
When choosing a trader to copy their trades, make sure to consider some important information about him like:
· Overall profit
· Preferred strategies
· Preferred assets
· Overall rating
Automated crypto trading has now become a standard across several crypto copy trading platforms. The copy trading process is fully-automated and if you wish, you can also carry out automated activities as well. For example, in copy trading, you can create Stop Loss, Trailing Stop Loss and Take Profit orders. Additionally, you may also diversify your portfolio and can trade with several assets.
Benefits of crypto copy trading platforms
Copy trading has gained huge popularity because of a number of benefits it offers. Before investing in copy trading, it’s better for a trader to understand that the ultimate goal of copy trading is to find the right crypto trader with a good record. If you choose the right traders and trades, crypto copy trading would be beneficial for you.
Let’s have a look at some of the key advantages of crypto copy trading:
1. Accessibility — With copy trading, the beginners or the novice traders may get an interesting and profitable route to the world of crypto trading. Additionally, the major advances in copy trading platforms imply that this kind of trading has now become easy and profitable.
2. Diversify — The copy trading offers multiple trading strategies, thus allowing traders get to allocate their investment portfolio to many providers across multiple assets. It also allows traders to make profits in different market environments.
3. Enhance the traders’ knowledge and skills — Considering copy trading allows traders to follow all the trading styles, strategies, and activities of the expert traders. Many of the professional traders have in-depth knowledge and skills in the crypto trading field. So, as a beginner, one can begin learning crypto trading by watching the trades and strategies of expert traders in action through replication of the successful strategies.
4. Free time — One of the key benefits of crypto copy trading is that it gives you a plenty of free time as the traders is choosing the trades of professional traders rather than monitoring the market continuously.
Copy trading bots
The best crypto trading platforms offer copy trading bots which automates trading and allow traders to get benefit from the success of expert traders. Considering copy trading bot allows traders to connect to your exchange account and then places orders automatically.
The expert traders who send buy and send signals are often compensated in the form of a certain percentage of profit or by selling some subscriptions to their services.
In addition to being able to copy the trades, it is also possible to copy the successful trader’s settings, such as take profit, stop loss, trailing stop loss, etc.
Benefits of using crypto copy trading bots
There are huge benefits of using copy trading bots as compared to manual copy trading. Some of these are:
· Saves time: The process involved in copy trading might be time-consuming as you have to choose an expert from a list of traders manually from the copy trading platform. And, then finding out when they place trades and keep monitoring until they stop. This is quite a longer process, but choosing copy trading bots automates the process and makes it almost instantly. They choose the right trades on your behalf and place trades automatically.
· Earn with zero experience: The crypto trading bots mostly do maximum of the work for you. It’s important for a trader to choose the right trading bot to meet your needs. After choosing the bot, you just need to sit back and allow it to do the complex things for you.
· Copy trade 24/7: As human beings, we are just limited to work for some hours. But the crypto trading bot is automatic software which never sleeps. Usually the copy trading bots analyze the experts and then perform copying their trades even if you are sleeping or busy with other tasks.
Best crypto trading platforms offering with copy trading bots
If you are a beginner and looking for the right crypto copy trading bots, go through the below list of top cryptocurrency copy trading platforms:
1. Wunderbit- This is an advanced crypto copy trading platform that allows its’ traders to copy trades and strategies from expert traders. The copy trading bot at Wunderbit platform performs copy trading. With TradingView’s pine editor you will get a powerful tool to create bots that allows you to have the same results as the professional traders to which you are copying without having much knowledge.
2. 3Commas — It is another popular crypto trading platform that offers the best copy trading strategies made available on their marketplace. It offers the copy trading bot as well as a marketplace where professional traders usually offer their trading strategies to other users. Choose the trading strategies which you wish to copy to your account and the copy trading bot will take care of the rest and will automatically place buy or sell orders.
Apart from this, this platform also supports an impressive list of crypto exchanges on which it is possible to perform automated copy trading like Binance, Bittrex, Kraken, etc.
3. Zignaly:- It is the best automated copy trading platform that allowing its traders to trade for maximizing their profits. You can consider the Zignaly copy trading bot which will automate your trading and helps you analyze the market, executing orders, and copy the trading activities of expert trades accordingly. The copy trading bots work throughout the day and thus, keeping your account active even if you are busy at work or are sleeping. This platform also allows traders to trade using external crypto signals.
4. Cryptohopper- This is the most powerful crypto trading platform that works with complete automation. This copy trading platform is designed to help traders to make the most of their trading strategies, maximize the chances of profits, and reducing losses. Both experienced and novice traders can join the marketplace and can perform copy trading manually or automatically using the copy trading bots.
5. eToro- This is a pioneer of copy trading in the cryptocurrency copy trading market. It has many popular and the most advanced social trading features in the market. eToro supports more than 16 cryptocurrencies for copying the trades. Unlike regular copy trading, choosing copy trading from this platform allows you to copy other traders’ actions with some adjustable levels of risk. This way, you will not be completely dependent on other trader’s activities and can diminish the risk of losses.
These days, copy trading has become increasingly popular among crypto traders who want to earn profits from crypto trading. The novice traders who are just starting their trading journey may choose the best crypto trading platforms to perform buy and sell orders 24 x 7 with copy trading bots.
This kind of copy trading allows beginners to follow professional and profitable traders. These trading platforms aim to democratize the trading process and offer many lucrative crypto trading strategies available to the new investors, who can copy the trades of expert traders automatically with the copy trading bots.
You may choose from the above list of copy trading bots platforms available nowadays that will automate the copy trading completely. All of these platforms have their own set of features which they use to let traders earn profits. So, It’s up to you how you choose the one which suits the most to all your crypto trading requirements.