What is Copy Trading in Crypto? How to do Copy Trading

You should now have a good overview of what is copy trading in crypto. This is a relatively simple process which is great for new traders to try out themselves, but it definitely comes with its own questions and concerns. Recognizing these concerns is all part of the process of grasping what is copy trading in crypto, but do not let them get too much in the way of your own activity.

• After you start your investment, you will have the same traders in your portfolio as the trader that you just copied.
• Say trader you’re following buys 100 shares of a particular stock.
• Once you’ve found a trader you want to copy, you can connect your account to their account and start copying their trades.
• This kind of social trading is ideal for investors who are beginners and good in picking the top traders.
• Talking to other traders can give you valuable insights and improve your trading skills.

It remains customer-focused and strives to offer the best user experience. In line with the Trust Project guidelines, the educational content on this website is offered in good faith and for general information purposes only. BeInCrypto prioritizes providing high-quality information, taking the time to research technical analysis for crypto trading and create informative content for readers. While partners may reward the company with commissions for placements in articles, these commissions do not influence the unbiased, honest, and helpful content creation process. Any action taken by the reader based on this information is strictly at their own risk.

Copy Trading vs Social Trading vs Mirror Trading

The presented trading history is less than 5 complete years and may not suffice as basis for investment decisions. If you absolve yourself from your own trading, then you can easily sleep-walk into disaster. If you want to be efficient, then you need to learn how to copy trade crypto intuitively. You need to learn about when you should follow one individual, and when you should switch things up and sync to somebody else.

• 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.
• After all, diversification makes you less dependent on market conditions.
• There are models that you can use to build your strategies, but you also have the option to copy the strategies of other traders through the copy trading feature.
• In exchange, they receive 10% of the profits earned by each follower.
• If you’re concerned about keeping fees low, then carefully consider the costs before trading.

Though it might take some time, it is a fluent ride later as the process is automated. The software could usually be set up to invest the same amount or the percentage as the trader being emulated. The lead traders themselves are paid a small fee for allowing their trades to be copied.

Copy trading crypto provides data transparency

But what exactly is involved in the actual process of crypto copy trading? As a crypto investor, you can copy the trades of experienced investors automatically – by renting their trading bots. So, when you as an investor rent a trading bot made by an expert trader, you are effectively copying their trading strategy.

Choosing the best copy trading platform can often mean the difference between short- and long-term success and dashed hopes. After all, social trading has continued to surge in popularity and with good reason. If people weren’t making money from it, then people wouldn’t continue to do it. Besides, it allows you to jumpstart your trading journey as a beginner, potentially gaining profits and generating a passive income without participating in trades directly.

Trality’s Marketplace and trend-following strategies

It’s important to note that while copy trading can offer practical benefits, it is not devoid of risks. Past performance is not always indicative of future results, and blindly following a trader’s every move can lead to losses. It’s crucial to conduct thorough due diligence when selecting traders to copy, considering factors such as their long-term performance, risk management strategies, and consistency.

• Once again, eToro is the perfect example here – the brokerage functions like such as platform already.
• It allows you to implement it in your portfolio for better gains.
• It’s important to note that while copy trading can offer practical benefits, it is not devoid of risks.
• Check for platforms that have forums, chat rooms, or social media integration, where you can connect and learn from experienced traders.

So, by using the service of your copy trader, you will gain or lose proportionately. However, you need to remember when selecting the traders to copy, you should know your trader’s position sizes they usually open, as this can impact your investment. This usually happens automatically and without the requirement for any manual interventions. This copy trading platform also offers the FXTM Invest service for a minimum deposit of $100. For instance, let’s say you’re interested in copy trading Bitcoin and Ethereum.

Set up the software

In terms of legal status, copy trading of cryptocurrencies is legit. However, it comes with its own risks and limitations, just like any investment. One of the obvious risks is that while copying trades, you may also lose some as it’s part of trading. Copying trades is also a great way to familiarize yourself with cryptocurrency trading quickly. While observing and practicing others’ investment strategies, you comprehend them easily.

• They can be considered a multi-tool, rather than specifically requiring certain market conditions.
• To use copy trading on 3Commas, you need to have a subscription plan that includes this feature.
• You can do copy trading on your own or through a copy trading platform.
• It is an all-encompassing platform that can meet all your trading needs.
• This minimizes your costs, while maximizing your profits, according to the project.

This steep learning curve and the option for automation make the process of following and replicating traders easier and more convenient, which naturally makes it more appealing. Automation provides a special peace of mind in knowing that your actions and decisions will be synced up even when you are asleep or busy yourself. Another aspect of its learning curve comes from the very simple fact that we are all still learning about how these markets actually operate. That being said, brokers such as the aforementioned eToro mitigate these issues and concerns, to an extent. In this case, investors trade the relative value with the expectation that the prices will return to a long-term average. These bots will have a smooth PnL when traded under the right conditions.

Is Crypto Copy Trading Safe?

Or they may be a big fan of shorting, which is where an investor borrows an asset and sells it with the expectation that the price will drop. They then buy the same number of the asset back at a lower price, return the shares to the lender, and profit from the rest. Since it’s powered by Binance, the Trality Wallet is built on the industry’s safest and most secure custodial wallet infrastructure. Any and all funds deposited into the Trality Wallet are backed by Binance.

• Check what kind of cryptocurrencies you can trade on the platform.
• But there are things that you should bear in mind when considering copy trading and profitability.
• Copy trading in cryptocurrency allows you to directly replicate the positions of another trader.
• Whenever the copied trader places a trade, the same trade is automatically replicated in the investor’s account.
• A trader failing to make a well thought out decision might result in them losing hundreds or thousands of dollars.

You would want to choose a broker that not only supports these popular cryptocurrencies but also provides access to other promising coins in the market. Now that we understand the importance of optimizing the risk-reward ratio, let’s focus on another crucial aspect – building a copy trading investment strategy. BitDegree Learning Hub aims to uncover, simplify & share Web3 & cryptocurrency education with the masses. Join millions, easily discover and understand cryptocurrencies, price charts, top crypto exchanges & wallets in one place.

Gain More From Your Trades

Choose from a wide range of unique strategies submitted by carefully selected crypto traders with verified track records. Copy trading can also have a negative impact on an investor’s psychological well-being. The fear of missing out (FOMO) can drive investors to make impulsive decisions based on the success of others. Additionally, having no control over your own trading decisions may cause anxiety and stress for some.

Brokerage platforms are submitted to much stricter regulations than crypto exchanges, offering crypto trading features. Yes, even new investors can use copy trading because it is a passive – system. This means that you can leave the difficult work of selecting investments to others. It’s possible to earn returns on your portfolio without spending hours researching the market.

Join our free newsletter for daily crypto updates!

The best part; is everything is automated, and you will be acting like a hedge fund without the hassle of compliance and paper work. In conclusion, copy trading crypto provides practical benefits such as access to the expertise of experienced traders, diversification opportunities, and time-saving convenience. However, it should be approached with caution and complemented by proper research and risk management. By leveraging the advantages of copy trading while remaining informed and discerning, investors can potentially enhance their cryptocurrency investment journey. You can choose from more than 1000 assets, like real stocks, commodities, forex, indices, ETFs, and cryptocurrencies.

• However, for now, these are the best social trading platforms you could use to copy trades from the top traders.
• Before making financial investment decisions, do consult your financial advisor.
• AvaTrade is a trusted global brand that is well-known for its extensive asset range for crypto, Forex, and CFD traders.

Achieving a well-diversified portfolio is crucial in mitigating risks and maximizing returns. Copy trading allows investors to diversify by spreading their investments across multiple traders with different strategies, asset allocations, and risk tolerance levels. Another crucial consideration is the range of cryptocurrencies available for copying trades. Look for a broker that offers a diverse selection of cryptocurrencies, as this will give you more options for building your portfolio. Depending on the crypto copy trading platform that you’ve chosen, you should have access to a full range of statistics and metrics.

Digital Surge Exchange Review: Is This Australian Broker Safe?

But if you perform copy trading with good knowledge and proper research, you can definitely make some money. You can look for platforms that have multiple support channels, such as live chat, email, or phone support. Fast and helpful customer service can help you solve any problems or questions you may have.

• There are a few important things to keep in mind before you get started with this strategy.
• Traders can also make mistakes, experience market volatility, or engage in fraudulent activities.
• Another thing to consider is the copy trading features of the platform.
• But it also has some challenges, such as finding trustworthy and compatible traders to follow, controlling your risk level, and keeping up with market changes.
• This best forex copy trade service provider uses the MQL5 language, the automated trading software that runs on your computer and trades on behalf of you.

Some of the best crypto copy trading bots are 3Commas, Cryptohopper, and WunderTrading. Remember, crypto markets are very risky and unpredictable, and even the best traders can lose money or make mistakes. You should be ready for ups and downs and have a plan to manage your risk. Another thing to consider is the copy trading features of the platform. Look for features that let you choose different traders to copy, change copy ratios, and set stop-loss limits. You don’t want to lose your money or your personal data to hackers or scammers.