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

Copy trading is one of the simplest ways to benefit from another trader’s expertise. It also means that you retain complete control over the outcome. Cryptocurrency investors can also choose more than one lead trader to diversify their portfolio.

• When considering cryptocurrency exchange rankings, though, both of these types of businesses (exchanges and brokerages) are usually just thrown under the umbrella term – exchange.
• Knowing the risks and reward potential can help you decide whether copy trading is a strategy you should adopt.
• Of course, if shorting and dealing with futures is your cup of tea, then, by all means, follow a trader who does this.
• As a result, when the trader makes a trade, your account will also make the same trade.
• Based on our research, we recommend using Bybit and eToro social trading platforms.

Traders can leave it totally to the software or watch the portfolio selection of their peers themselves and take trading actions based on their investment goals. Many brokers now offer automated copy trading, along with many other features. When choosing the trades of other traders on the platform, you may filter those traders. They will have useful stats and insights about each investor, their profit/loss ratio for the last year, and their investment strategy.

Copy Trading Features

By using the feature, if you find a trader that has consistently generated high returns, then you could theoretically copy their strategy to achieve the same results. The main advantage of using copy trading is that it allows you to take advantage of another person’s investment experience and knowledge. Without having someone guide you and give you trading tips, you would have to spend hours analyzing and deciding which stocks you should buy or sell. You would have to become an expert at fundamental and technical analysis and follow the market trends and price movements.

• All you need to do is sign up on the exchange, link your exchange account to Coinmatics with an API key, and pick a strategy from a trader.
• The software could usually be set up to invest the same amount or the percentage as the trader being emulated.
• For starters, bear in mind that by opening yourself up to copy traders, you may feel a new level of responsibility for those following you.
• You can also follow and copy the best traders on NAGA with their “auto copy” feature, which shows you their strategies and results.
• This approach allows novice investors to capitalize on the expertise of seasoned traders by automatically replicating their trades in real-time.
• With copy trading, you’re always in control.You can decide to unfollow the trading strategy whenever you decide that copying someone no longer makes sense financially.

Copy trading is one of the best ways to automate your investment strategy. This eliminates the guesswork and the lack of experience that’s needed when choosing how to invest your hard-earned money. Of course, the strategy might not be the best strategy for all investors, but these systems have worked for many retail investors. With this strategy, instead of replicating an investor’s movements trade for trade, you’re mirroring their overall investment style. In that case, you might choose to mirror Warren Buffett’s investment style.

Benefits of Copy Trading

Investors can rent profitable bots tailored to specific risk tolerances (low, medium, and high) and individual investment goals. A full suite of metrics is available, allowing investors to decide on a bot based on clear, quantifiable data. But there are things that you should bear in mind when considering copy trading and profitability.

• You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
• Let’s say you’re considering copying a top trader who has consistently generated high returns but takes on substantial risks.
• Once you copy a trader, all of their opened trades are automatically copied to your account.
• If you’re new to crypto copy trading, you need a platform that has a simple and attractive interface.

There is no easy answer to how much money you can make from copy trading. It depends on many things, like how well the traders you follow do, how much money you invest, how much you pay in fees and commissions, and how the market moves. The platform does not charge any fees for copying or being copied.

Top Professional Crypto Trading Terminals- Better Way To Trade

To become a copy trader, you need to have a trading account with a broker that offers copy trading services. Once you’ve found a trader you want to copy, you can connect your account to their account and start copying their trades. EToro is one of immediate edge the best copy trading platforms, and it offers a wide range of assets (Forex, crypto, commodities, stocks, ETFs, and indices). The platform is based in Tel Aviv, and it was launched in 2007 by Ronen Assia (current CEO), David Ring, and Yoni Assia.

Be careful of platforms with high fees that may eat up your profits over time. Another thing to look for is the social trading community on the platform. Talking to other traders can give you valuable insights and improve your trading skills. These features give you more control and help you adjust your copy trading strategy to your risk level and goals. You can choose from hundreds of traders who trade different coins and strategies, and see their profiles, comments, and track records.

Is crypto copy trading good for beginners?

The top traders can get commissions from their copiers based on their monthly profits. Phemex is a crypto exchange from Singapore that lets you trade over 272 crypto pairs with spot and contract trading. It has many features that help you make money with crypto, like earning interest, staking in launch pools, and prediction markets. It has many features for traders, like spot, margin, futures, options, staking, lending, savings, and more.

• EToro is a multi-asset platform that offers both investing in stocks and crypto assets, as well as trading CFDs.
• The crypto space has only existed for a handful of years, and so everybody is still trying to grasp how it functions in terms of technical analysis.
• In this case, all you have to do is decide which trader (or traders) to follow and how much of your account capital to allocate to that trader.
• You need to consider many factors while selecting your copy trading software in India , USA or other countries.
• To start copy trading on Pionex, you need to follow some rules set by the traders you want to copy.

However, it’s important to acknowledge that copy trading carries inherent risks. Investors should exercise caution due to the volatile – nature of cryptocurrencies themselves. While copy trading offers a chance at potential gains, losses are also possible.

BingX: Best for copying global traders

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. When it comes to -, selecting a suitable copy trading broker is an essential first step. You want to find a platform that offers reliable and secure services, while also meeting your specific needs as an investor.

The best way to do this is to learn about the blindspots and limitations of the traders you are interested in. Even the best of traders will have their own knowledge gaps and mistakes. Know this, and learn what they are, so that you can back away from them when you foresee a situation that they might not be great at. If you find a trader who aligns with your own trading beliefs, you will feel much more comfortable going forward and copy-trading crypto with them. However, many newcomers tend to feel the most comfortable doing simple spot trading. Understanding what is copy trading in crypto, and best practices on how to copy trade crypto in 2023.

Is copying cryptocurrency trades legal

To start copy trading on Pionex, you need to follow some rules set by the traders you want to copy. Copy trading is a way of making money by following the trades of another principal trader who has trading knowledge and proven success rates. You will also not learn much by simply watching other people trade without attempting to trade yourself. You won’t learn much if you just watch other people trade without trying to trade yourself.

• This copy trading platform allows you to open 100 currency or stock charts at a time, and the 21 timeframes enable comprehensive and detailed analysis of even minor price movements.
• The array of parameters one eventually chooses depends on their own preferences.
• When you become a follower, you can open and close trading positions automatically, get access to their trading history and earn more from your crypto without any prior knowledge.
• While some of the best things in life might be free, profitable trading bots are not one of them.
• Usually, it is experienced traders who are constantly generating more profit than losses.
• Many traders who seek to replicate the trades of other traders are primarily interested in their trading performance, not in the markets they trade.

There is no need to select “Enable Withdrawals” in API restrictions. This ensures that your balance remains under your total control. Moreover, our users are able to protect Coinmatics account with two-factor authentication. In 2014, eToro became the first trading platform to support cryptocurrencies when it added bitcoin (BTC) support. As a new investor looking to use the copy trading system, you should decide on your goal. For instance, you might copy someone who is more interested in hedge funds, commodities, etc.

Diving Into the Social Side

Though this software is automated, initially, you have to provide your input. Yes, crypto copy trading can be profitable, but it is not guaranteed. You have to choose a secure platform and a profitable trader to follow. They can help you trade automatically and make the most of market movements. Copy trading in cryptocurrency allows you to directly replicate the positions of another trader.

• This risk is often forgotten about when talking about copy trading risks but is still one to keep in the back of your head.
• Well, in most cases it is legal the same as to hold and trade crypto assets.
• The first step involved in crypto copy trading is arguably the most important.
• Copy trading is safe, but if the trader opens a bad trade, your account will replicate that trade, and you might lose your funds.
• You can join as an investor (to copy other trades) or you can join as a trader, so that others can copy your trades and you can make money.

To do copy trading on BitMEX, you need to use another service that connects to BitMEX with an API. Some of the services that you can use are Zignaly, AIVIA, and WunderTrading. Copy trading is like having your own personal crypto mentor, guiding you through the ups and downs of the market.

Conclusion: Best Crypto copy trading platforms

However, knowing that somebody else is having the very same successes as you can be elating and deeply positive to your well-being. 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.

• Choose your favorite, seasoned trader/s and software, and then customize its settings.
• This is where you buy coins or tokens at the market price and your trade is dealt with on the spot, rather than at a future date.
• You should be able to find your way around and make trades without any hassle.
• Essentially, you are copying the investment decisions of a seasoned trader through software.
• After all, social trading has continued to surge in popularity and with good reason.
• Another aspect of its learning curve comes from the very simple fact that we are all still learning about how these markets actually operate.

Copy trading is one crypto trading strategy that allows you to build an automated mechanism for making trades. Essentially, you are copying the investment decisions of a seasoned trader through software. You can check their performance history, risk level, fees, and strategies. Then you can pick one or more traders to follow and copy their trades automatically on your BitMEX account.