Copy trading is a great way to make passive incomes in the crypto market. It has made a significant impact on global trade, but it can be a bit confusing for those who are just starting out or entering in crypto trading sphere. Yet embarking on this exciting journey can be a bit overwhelming, here we will discuss all about copy trading and how it works.
Copy trading is all about learning from the past success of experienced traders and lets you make a passive income. Since its invention, copy trading or mirror trading has gained huge popularity and the rising crypto trading market has adopted it along with other latest and conventional trading features. In the crypto market, this trading method comes in the form of social trading platforms where the traders can copy each other’s strategies.
Let’s understand, what the heck is copy trading?
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 beginners 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.
Such trading methods are profitable and that’s why they are gaining huge popularity.
Choosing copy trading bots at the best crypto trading platforms automates the process. The copy trading bots/software automate the buying and selling of crypto assets by mitigating the original trades of professional or experienced traders. As a crypto trading user, you only need to deposit some initial amount which could be as low as $50. You need to select an expert trader on any of the crypto social trading platform where everything will be automated.
There are various exchange platforms available for cryptocurrency copy trading which allow traders to put stop-loss orders on copying so that they can exert control over the potential risks. Copy trading could be manual or automated, but it is much better when automated. And, if you are a pro trader, you can even offer your services via social trading platforms and earn profits when people copy your trade to make a profit.
Understanding crypto copy trading popularity
Generally, there are two types of traders where the first one are those who conduct their own research, gather information on different strategies, and then build their skills to perform trades.
And, the second type of trader is focused on generating money while investing lesser time and effort. The latter traders are more attracted to copy trading, but the traders from both types use this method. One of the main reasons for choosing crypto copy trading is that they know that they’re not trading on their own while copying the trade and strategies of the experienced ones.
This trading method is not for those with limited experience in the crypto market but used by seasoned traders to research the market and save time so that they can focus on other important tasks.
Risks of copy trading in the crypto market
We all know that the crypto market is volatile, and many trading strategies are copied and are time-sensitive. If such a strategy is copied by other users, its value will be diminished, and many who are engaged in this kind of trade will end up at a loss.
Apart from this, liquidity is also an issue. While these issues are important, some strategies may work effectively if copied. And, if the trader’s analysis is good enough to identify such strategies, copy trading will be beneficial.
For inexperienced or new users, who are the prime audience for mirror trading, may face such risks or issues. They may not possess the right skills to evaluate such strategies, and therefore, they have to rely on the features offered by strategy makers or experienced traders.
How does copy trading work?
Copy trading is not dependent on the information of fellow traders rather it is much dependent on the behavior of other traders. It allows a trader to copy the action or decisions of other traders. Make sure to copy the trades using an automated platform.
In this trading, the trader links a portion of their portfolio to the portfolio of another user, and all of their open trades can be copied from account to account. Additionally, all the actions taken in the future will also be copied. The copy trader can decide how much they want to invest in the experienced trader they are copying the trades from.
With copy trading, you are getting a replica or mirror copy from the copy traders’ real account. Basically, there is a master account (the one from the expert trader which you are copying), and the follower account, i.e. copier. Whenever the master opens, closes, or exits the trade, all the activity will be replicated to the copier account automatically.
This is why it is always important to select the right copy trading platform while considering all the pros and cons. Make sure to choose a copy trading platform that is integrated with trusted platforms like Binance, KuCoin, etc.
Let’s understand copy trading with an example:
Copy trades are often limited to 20% of the trader’s portfolio. Trade sums are expressed as a percentage of the trader’s portfolio here.
Let’ say, the trader might have $3000 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 invest in larger amounts. Instead, they should use only 10% i.e. $300 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 $ 300 is actually the percentage amount from the trader’s portfolio. It will be 10% of their portfolio which exceeds $3000.
And, the copy trader would do the same if they conducted trade for $300.
Different types of copy trading
The copy trading platforms offer many things to copy from expert traders. Different methods will have different profits over time, and therefore, it is essential to choose the most suitable one:
- Copy bots – Copy preset coded algorithms which are created by expert traders and programmers. This kind of trading connects to your exchange account and then places orders automatically.
- Copy traders – When they take a position in the market, set a stop loss, or exit the trade, your portfolio will also do the same automatically.
- Copy signals – Trading signals are the set of directions from the trading expert who will tell you exactly when to buy or sell any trade.
Depositing and withdrawing money in crypto trading
Any copy trader who feels impressed with the original trader’s investments and profits can also increase their investment easily. This allows them to put up more money whenever the trades are copied to their account and can boost profits over time.
Sometimes, this process may introduce more risks too, potentially leading to greater losses. That’s why make sure to build a diverse portfolio rather than focusing investments on one trader only.
The best copy trading platforms offer a flexible experience to perform copy trading and make it easier to control your money manually. If you find a trade that doesn’t appeal to you, it gives you a chance to close it yourself.
Copy trading bots
Copy trading bots allow the traders to benefit from the success of expert traders by mirroring their trades. Those 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 numerous benefits of using bots for copy trading 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 and find out when they place trades and keep monitoring until they stop. All this is a longer process, but choosing copy trading bots automates the process and makes it almost instantly.
- Earn with zero experience: The crypto trading bots do most of the work for you and your only input is choosing the right bot to meet your needs. From choosing the bot, you just need to sit back and allow the copy trading bot to do the complex things for you.
- Copy trade 24/7: As human beings, we are limited to work for some hours. But the trading bot is automatic software that never sleeps. It will analyze the experts and then perform copying their trades even if you are sleeping or busy with any other task.
Best crypto trading platforms offering copy trading bots
If you are looking for the right crypto copy trading bots, go through the below list of top cryptocurrency copy trading platforms for beginners:
- 3 Commas – It is one of the most popular crypto trading platforms that offer the best copy trading strategies made available on their marketplace. It offers copy trading bot as well as a marketplace where professional trades 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.
It supports an impressive list of crypto exchanges on which it is possible to perform automated copy trading like Binance, Bittrex, Kraken, etc.
- eToro- This is a pioneer of copy trading in the cryptocurrency market. This platform has many popular and the most advanced social trading features in the market. It supports more than 16 cryptocurrencies for copy trades. Unlike regular copy trading, eToro’s copy trading 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 lessen the risk of losses.
- Trade-Mate – This is a distinctive platform offering advanced functionalities to perform crypto copy trading on multiple exchanges. This trading platform is famous for its copy trading bots that bring countless opportunities for traders. On the other hand, if you are an expert in trading and have much experience and knowledge, you can start making money by becoming a pro trader.
- Wunderbit- This is an advanced crypto copy trading platform that allows crypto investors to copy trades from expert traders. The copy trading bot here allows 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.
- Cryptohopper- This is one of the most powerful crypto trading platforms that work with complete automation. This 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 beginners can join the marketplace and can perform copy trading manually or using the copy trading bots.
- Zignaly:– It is the best copy trading and automated trading platform that allows traders to trade for maximizing their profits. You can consider the Zignaly copy trading bot that will automate the trading and helps you analyze the market, executing orders, and copy the trading activities of expert trades. These bots work throughout the day and thus, keeping your account active even if you are sleeping. This platform allows traders to trade using external crypto signals.
Copy trading is becoming increasingly popular among crypto traders who want to generate profits from trading. The novice traders who are just starting their trading journey can choose the best crypto trading platforms to perform buy and sell orders 24×7 with copy trading bots.
Copy trading platforms aim to democratize the trading process and make lucrative crypto trading strategies available to the new investors, who can copy the trades of expert traders automatically with the copy trading bots. This kind of copy trading allows beginners to follow professional and profitable traders.
There are plenty 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 set themselves apart. It’s up to you how you choose the one which suits the most to all your needs.