Copy Trading explained! Does it Make Sense for Novice Traders?
Have you ever copied the
homework of an intelligent student in school because you didn’t have the time
or expertise to do it? I am sure; you have done this as I had also done the
same in my school. And, copy trading is something that is equivalent of this.
You find an expert trader who seems to know the steps to success, mirror their
movements, and earn profits.
Obviously, the aim of copy
trading is to earn profit from the good decisions of experts. However, nothing
is guaranteed in the crypto trading sphere. There might be times when the
trades may get wrong by the expert traders, and if you are copying them, their
losses may become your losses too.
Is
copy trading right for you?
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.
Copy
trading
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.
TrailingCrypto is one of the
best crypto trading platform which
offer copy trading services to its traders. The platform allows 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 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
to copy trades from experts?
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. Once 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.
Why
is copy trading important?
Unfortunately, often novice
crypto traders lose money due to a lack of basic technical skills and a
tendency to fall for the market speculations. Crypto copy trading helps
inexperienced traders reduce the risk inherent in the fluctuating
cryptocurrency market by offering them access to the winning tactics of expert
traders.
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:
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:
·
Experience
·
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.
After
you have selected a trader to copy and decided whose you want to copy all his
trades, all this means you are opening on all of his existing trades.
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.
The
best crypto copy trading platform
TrailingCrypto is one of the
best copy trading platforms where you can give trading a go without risking
your money. Copy trading is popular
among crypto traders and is widely used within popular third party platforms.
TrailingCrypto also offer
crypto copy trading signals which can be used by the traders to take a position
on the market. Once you have received the signal, you can edit settings and
trading parameters in line with your strategy. To open a copy trading account,
you need to sign up at TrailingCrypto. Then you can use the platform to search
for the expert traders. When you’ve spotted a trader whose trades you would
like to copy, allocate a portion of your funds for copying him, and let the
copy trading bot perform the best trades for you.
No matter what your level of
engagement and expertise is,TrailingCrypto is your one-stop solution for all
your crypto trading needs. That includes not just copy trading, but also
opening positions using different advanced order types.
You may consider choosing crypto copy trading bots that allows
you to copy successful traders automatically in real-time.
Copy
trading bots
The best crypto trading
platforms like TrailingCryptooffer 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 tradingbot to meet your needs. After choosing the
bot, you just need to sit back and allow it to do the complex things for you.
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