Everything You Need to Know About Crypto Copy Trading

Everything You Need to Know About Crypto Copy Trading


Beginners often want to jump into crypto trading without considering its technicalities. But the world of crypto is bewildering. Its high volatility, sudden free falls, and scams make the market highly risky. If you enter the market without a clear strategy and knowledge, you may be making a gamble.

But this does not mean you have to wait until your learning curve is over. Crypto copy trading is one way around it that lets you dive into the crypto market instantly.

What Is Crypto Copy Trading?

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.

It liberates you from the tedious process of continually analyzing price charts and following market trends. In addition, you do not necessarily have to learn all the strategies and be proficient with market technicalities. Copy trading apps run on autopilot and cover all those things by copying the trader you are following.

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.

How Does Crypto Copy Trading Work?

The copy trading procedure varies from platform to platform. But generally, it involves choosing an experienced trader and following their decisions. You then select an app to replicate those decisions for you.

These apps work on trained models and can imitate others’ investment strategies. Also, some crypto copy trading apps allow you to choose multiple traders. This way, you can develop your comprehensive process.

Choose your favorite, seasoned trader/s and software, and then customize its settings. After that, the copy trading software will be ready to make crypto trades on your behalf.

4 Steps to Start Copy Trading

Here’s how you can start your journey with crypto copy trading apps.

1. Choose a Crypto Copy Trading App

To begin copy trading, you must first choose a reliable and trusted copy trading app. It is advisable to conduct thorough research on the best available options in the market. For this, you must check out its tools, leverage ratio, educational content, supported cryptocurrencies, and fees.

In addition, you should look at the intuitiveness of the app’s user interface, so you can easily manage your portfolio. Also, check the reviews about the copy trading platform to gauge its performance. Lastly, look for the authorization status of the platform. Certification from the regulators like FCA, SEC, ESMA, or others ensures the platform’s credibility.

2. Follow a Seasoned Crypto Trader

Once you have chosen the right software, selecting and following a seasoned trader is often advisable. It is the most critical part of copying trades, as your profits depend on it. For this reason, the trader should have the skill to handle cryptocurrency investments. You’re basically looking for traders will a long-term record of profit.

Furthermore, it is crucial to understand crypto market sentiment and its working so that you can build a strategy accordingly. Also, you should be able to identify bull and bear flags and review the trader’s performance during both markets to recognize their strategies.

3. Preparing the Copy Trading Software

After choosing a crypto copy trading platform and a seasoned trader to follow, you should manage the platform’s settings. Though this software is automated, initially, you have to provide your input.

For example, you should assign your preferred amount for investment. It can be the same as the trader you are following or a percentage of it. Setting the amount according to your risk appetite is advisable so that you can tolerate any potential losses.

4. Monitor Your Progress

You can also monitor the results copy trades are generating for you. It will allow you to track what has worked best for you. Observing the progress will also enable you to understand how to backtest the crypto trading strategies.

Besides, the settings panel of the copy trading app will give you complete control over your assets, even though they are self-executing. So, if you feel that a trading move is not right, you can opt-out anytime.

Why Opt for Crypto Copy Trading?

Here’s why you should consider copying crypto trades:

1. A Beginner-Friendly Option

It is an ideal option for rookie traders unfamiliar with the digital asset market. It allows them to immediately enter the market while still learning the trading technicalities.

2. Enhances Your Trading Knowledge

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. After all, trading platforms generally offer educational content that helps you grow as a trader.

3. Helps in Portfolio Diversification

Portfolio diversification is another plus point of copying trades. You can follow multiple traders who use different mechanisms and invest in varying assets. It allows you to implement it in your portfolio for better gains.

4. Trading Convenience

Following price charts all day long can be tiresome. Copy trading saves you from this struggle as it automates your process. Also, it is not necessary to work out entire investment strategies independently.

Is Crypto Copy Trading Safe?

In terms of legal status, copy trading of cryptocurrencies is legit. Various copy-trading platforms have secured the approval of financial watchdogs like the European Securities and Markets Authority (ESMA) and the Financial Conduct Authority (FCA) for copy trading. 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.

It is also expensive, as some platforms may charge premium rates. And, if you pick an inexperienced trader, you will have to bear the losses along with the platform charges.

In addition, it may limit your growth as a trader. Since you will be relying completely on another person, it may not give you the analytical knowledge needed to excel at trading.

Another risk of using crypto copy trading apps is they may experience a system outage or cyberattack at any time. It means your assets will depend on the performance and security of the software.

Crypto Copy Trading Simplified

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. Lastly, you can monitor results to access the strategies.


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January 24, 2023 at 04:23AM

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