What is Copy Trading in Crypto? A Helpful Guide for Novices

Seasoned copy traders would compare the features of various platforms and go through their reviews before arriving at a decision. Basically, cryptocurrency copy trading is all about identifying skilled traders and re-executing their moves literally. A trader doesn’t have to spend time picking market trends or learning complex trading methods. Rather, the software just mimics what the expert trader is doing.

• However, it’s important to consider the potential risks involved, such as blindly following the wrong trader or experiencing slippage.
• For example, the news of interest rate hikes has caused volatility in crypto markets before, which could cause your position to get stopped out.
• Imagine, what if you could open the same traders as professional investors.
• Many brokers now offer automated copy trading, along with many other features.
• It is what most people think of when they think of trading– it is simple and straightforward.
• ZuluTrade supports over 40 forex brokers, one of which being their integrated solution (AAAFx).

Since you’re just getting started, you can start small and add more money to the trader later if you’re happy with how they’re doing. I didn’t know there was a term for replicating someone’s trading actions in order to maximize profits especially if you are new to trading until now. Unlike many of its competitors, OKX has been dubbed a one-stop shop, due to the variety of services that it offers. User’s will be happy to know that OKX’s suite of products is bound to meet most of their needs.

Best Crypto Trading Bots in 2023 (Compared) – Top Options

You can choose from 340+ trading pairs and find the best traders to follow. After you have set up your account, you can go to the “Marketplace” on 3Commas and find traders that you want to copy. You can filter them by different criteria, like an exchange, coin, profit, risk score, followers, etc. In copy trading, you don’t have to learn anything or spend hours looking at charts.

• If the risks outweigh the potential rewards for your investment goals and risk tolerance, it might be wise to look for other traders who align better with your preferences.
• Copy trading is a special type of trading activity that involves copying trades from other traders.
• Scrutinize the performance history of traders you are interested in copying, analyzing factors such as their trading strategies, risk management techniques, and overall track record.
• However, knowing that somebody else is having the very same successes as you can be elating and deeply positive to your well-being.
• It’s important to note that while copy trading can offer practical benefits, it is not devoid of risks.

This means that if your chosen trader generates positive returns, they will receive a portion of those profits as compensation. Performance fees can incentivize traders to perform better and align their interests with yours as an investor. Another crucial aspect is monitoring and evaluating the performance of the traders you are copying. Regularly review their strategies, performance metrics, and market conditions to identify any necessary adjustments or potential red flags. Maintaining an active role in managing your copy trading activities ensures that you stay informed and can adapt your strategy as needed. Now that we’ve explored the risks and rewards of copy trading in the crypto market, let’s delve deeper into optimizing the risk-reward ratio to make the most out of this investment strategy.

Copy trading simplifies crypto investing

Other considerations include the fees you are paying to the trader and the copy trading platform. In essence, it allows you to follow other traders into their trades, and profit if they are successful — usually at a fee. If you want a portfolio that matches the performance of investing pros, copy trading may help. In a nutshell, copy trading emulates a stock market expert’s trading activity.

• This process works through copy trading platforms, which allow traders to share their trading history and performance data.
• For example, Binance is based in Tokyo, Japan, while Bittrex is located in Liechtenstein.
• Of course, if times occur when you do not feel comfortable with copying anybody else, then simply disconnect from them all and take matters into your own hands.
• Try to select well-known Copy Trading providers with a long history, a solid track record, and preferably registration with at least one of the main regulators.
• You can see your balance, profit, loss, open positions, closed positions, etc.

So, if some issue arises, like fraud or being unable to exit trades, you can call customer support. You also need to check the performance history and statistics of the platform. These are important for evaluating how well the traders on the platform are doing. Check what kind of cryptocurrencies you can trade on the platform. It’s better to have more options and not depend on one coin only. Look for platforms that have popular coins like Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and others.

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Trading is risky and letting other people do it for you may do more harm than good. A third major risk category is liquidity risk, the risk that you are unable to close a trade at a reasonable price, because of insufficient buying or selling interest. This happens in markets with little interest, or outside of regular trading hours. This risk is often forgotten about when talking about copy trading risks but is still one to keep in the back of your head.

• It allows you to implement it in your portfolio for better gains.
• This feature also provides new revenue streams for lead traders.
• Check for platforms that have forums, chat rooms, or social media integration, where you can connect and learn from experienced traders.
• This way of manual copy trading is available for purchase as well, with many “influencers” acting as paid signal providers, usually in private Discord groups.

Bybit currently supports up to 15 trading pairs, including BIT/USDT, ETH/USDT, XRP/USDT, and a number of other highly liquid pairs. You could potentially make money by copying another trader’s skills and experience. As a result, it is ideal for beginners because they do not need to fully comprehend the market. Instead, they can rely on the knowledge of other traders to make sound decisions. Well, in most cases it is legal the same as to hold and trade crypto assets. Our software allows you to monitor and copy trades of your preferred trader, all the execution is performed by your exchange (like Binance).

What is copy trading?

Of course, you may choose to follow traders who focus on crypto trading. Many companies realised the business opportunity and started to build automatic copy trading services, where users could automatically copy the traders of other successful investors. Whether or not copy trading is profitable mostly depends on the trader you are copying. Copy trading is a trading strategy that allows traders to copy the trades of other traders.

• 77% of retail investor accounts lose money when trading CFDs with this provider.
• Copy trading can offer many benefits, but it’s important to consider the potential risks involved.
• Plus, thoughts like this make us mindful of how our actions affect others, which is good practice as trading is essentially a conversation about value being enacted on a global scale.

The array of parameters one eventually chooses depends on their own preferences. Amateur cryptocurrency investors need to carefully determine what is important to them for making a decision regarding crypto trading strategy. Are they left to fend for themselves, speculating about the prices and taking to stride the sharp ups and downs of the cryptocurrency industry? Thankfully, there are tools that help such traders explore the potential of the cryptocurrency industry, simplifying over-complex cryptocurrency trading by following expert traders. As soon as you start using this type of platform, you’ll be able to easily filter through trading results from experienced traders.

The Best Crypto Copy Trading Platform—The Trality Marketplace

Many well-versed traders are very happy to provide this knowledge to the public as a way of giving back to the community that helped them gain their riches. Gone are the days of viewing trading as a zero-sum game where one must win and one must lose. While trading definitely involves wins and losses, those who win can always help those who lose by educating them. We’ve covered it throughout this tutorial, as it is impossible to explore what is copy trading in crypto without viewing its social elements, but this has only scratched the surface. There are two major ways in which copy trading can be a social activity. The point here is that you should go out of your way to locate a trader who operates in a way that you are comfortable with.

You can choose from more than 1000 assets, like real stocks, commodities, forex, indices, ETFs, and cryptocurrencies. You can also follow and copy the best traders on NAGA with their “auto copy” feature, which shows you their strategies and results. WunderTrading is a service that works on the cloud and connects to many crypto exchanges, such as Binance, Bybit, OKX, and others.

Selecting a Suitable Copy Trading Broker

This allows you to create your own trading strategy and automate it. Many people say that copy trading is a great way for beginners to get acquainted with the market. However, it requires skill to figure out which traders to copy, and which ones to ignore. Essentially, you already need to be a good trader yourself, before you would ever be able to really know which traders are solid, and which ones are not. There are hundreds, if not thousands of trading signal providers to choose from.

• There is no need to select “Enable Withdrawals” in API restrictions.
• The most important takeaway is that copy trading can happen even on exchanges that do not have the tools built in.
• You can also enjoy the advantages of OKX’s exchange, such as high liquidity, low spreads, and various trading tools.

You choose the amount you want to invest and simply replicate everything they do in real-time. As a result, when the trader makes a trade, your account will also make the same trade. Copy trading can offer many benefits, but it’s important to consider the potential risks involved. Investors should always conduct due diligence and thoroughly research a trader’s track record, strategy, and risk management practices before deciding to copy their trades. Four years later, in 2018, the platform added support for ether (ETH) and ripple (XRP). Since then, the number of cryptocurrencies supported by the platform has continued to grow.

Building a Copy Trading Investment Strategy

These algorithms have been built and perfected to execute trades based on many different inputs, and process these inputs way faster than any human will ever be able to. Because of the algorithmic nature of trading, it also runs 24/7 and is not affected by emotions. The community-sharing of ideas is a great way to improve your trading, boost your performance and to learn new things from like minded people. Exchanging different viewpoints will generate insights that you will never find on your own.

Just as businesses must know their customers, so too should you do your due diligence when picking a reputable trading platform. Copy trading should only be done through a trusted source, and we highlight one of the best crypto trading platforms below. Crypto copy trading – is an easy way for beginners to get started with trading. You can do it through AI-based self-executing software and follow the right trader and platform to gain profits. Afterward, you can customize the trading procedure according to your funds and preferences.

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A clean design and clear instructions can make your trading experience much better. One of the coolest features of eToro is its CopyTrader technology. You can find the investor you want to copy on the Copy Discover page, where you can search for the type of investor you are looking – for. It is a good idea to test out and interact with the platform using a demo account before beginning copy trading for real. To comprehend the legal status of copy trading in the country one resides in before investing is as important as to establish that the dealer is regulated.

It can also be automated with the help of robots and expert advisors. Mirror trading typically takes less time and effort than social trading, especially when automated. Copy trading works by connecting an investor’s trading account to the account crypto trading ai of the trader they wish to copy. Whenever the copied trader places a trade, the same trade is automatically replicated in the investor’s account. This allows the investor to mirror the trader’s strategy and benefit from their expertise.