What Is Copy Trading and Should You Do It?

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. For example, some countries may need platforms to get licenses or follow anti-money laundering and tax laws. Some countries may also limit or ban certain kinds of crypto assets or activities. So, you should always check the legal status of crypto copy trading in your country before using any platform or service. Look for platforms that give you detailed historical performance data, such as win rates, average returns, and maximum drawdowns.

• As soon as you start using this type of platform, you’ll be able to easily filter through trading results from experienced traders.
• Once the trader zeroes in on the software, the next step is to set it up.
• You can also change some settings of the bot, such as the stop-loss percentage, take-profit percentage, and leverage ratio.
• BYDFi offers a demo mode that allows you to make practice trades using real market statistics.
• Copy trading could also be expensive if you’re paying commissions for frequent trades.

Also, make sure there’s enough money in your trading account to cover trade activity. Another significant advantage of copy trading crypto is the potential for diversification. 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.

Best Crypto Copy Trading Softwares (Cryptocurrency Social Trading)

Systematic risk is a risk you cannot really protect yourself against; this risk is present in any market. The outbreak of the coronavirus, or the terrorist attacks of Sept. 11, 2001, are good examples of these events, which caused large losses for many traders. WunderTrading offers a platform for copy trading that supports Binance, FTX, Kraken, Bybit and many more exchanges. If you are looking for a single recommendation, I would suggest you start with PrimeXBT Covesting as it offers some great data and has a proven track record.

• They are one of only a few top forex brokers to offer fixed spread forex trading.
• Say you’ve picked someone who consistently generates high returns in their portfolio.
• In this case, investors trade the relative value with the expectation that the prices will return to a long-term average.
• Firstly, you need to understand the trading system of the trader you want to copy.

PrimeXBT is a crypto copy trading platforms that also offers stocks, forex and commodities trading, allowing crypto traders to explore other financial markets. If you are a pro-trader, you can offer your service via these social trading platforms and earn a profit when people copying your trades make a profit. The best part; is everything is automated, and you will be acting like a hedge fund without the hassle of compliance and paper work.

How does crypto copy trading work

On the Trality Marketplace, you’ll have all of the requisite information at your fingertips, ensuring that you can copy trade with complete confidence. Bot Creators can now monetize their bots and earn passive income from investors around the world by having their bots listed on Trality’s Marketplace. Most importantly, bot algorithms remain completely private, meaning that each creator immediate edge retains full IP rights. Wasay Ali is a versatile professional writer with global experience and a background in mechanical engineering and social science. He is adept at crafting news and informational content for the crypto space and has experience writing for other niches. He has worked with several digital marketing agencies and clients in the US, UK, Pakistan, and Europe.

It helps Professional traders to monetize their skills by allowing others to copy their strategies. It’s essential to carefully consider the fee structure and weigh it against the potential returns you expect to make through copy trading. Remember that while low fees may seem attractive, it’s equally important to assess the quality of the platform and the performance of the traders available for copying. On the other hand, performance fees are calculated based on a percentage of your profits.

What is crypto copy trading and how does it work?

However, it’s important to consider the potential risks involved, such as blindly following the wrong trader or experiencing slippage. Ultimately, whether copy trading is right depends on your preferences and risk tolerance. It’s crucial to do your due diligence and research thoroughly before engaging in copy trading. OKX Copy Trading aims to create a trading tool that is efficient, transparent, and profitable for OKX traders. In a single click, copy traders can explore new revenue streams, gain exposure, and engage with the larger trading community.

This freedom from constant monitoring allows them to focus on other aspects of their lives while still being actively involved in the cryptocurrency market. However, too much transparency may lead to losses for the platform, as followers may be able to employ certain techniques to avoid paying following fees. Therefore, there is a need for information transparency (i.e., detailed versus aggregate trading performance) and the timed release of data (i.e., immediately or with a delay).

What is copy trading in crypto and why is it so revolutionary?

The copy trading feature was added in 2010, and it established itself as the world’s leading social trading network. Yes, copy trading is legal, but each country may impose its own regulations. Note that not all trading platforms are available for all regions.

• After all, trading platforms generally offer educational content that helps you grow as a trader.
• If they allocate 5% of their portfolio to a specific stock sector, you’d do the same.
• Key metrics used when selecting bots for the Marketplace include risk-adjusted return, minimum trading activity, and time under water.
• The Trality Wallet—enjoy all of the benefits and functionality of your Binance account while being able to deposit, withdraw and manage your funds all in one place.
• Talking to other traders can give you valuable insights and improve your trading skills.

This makes many people favour mirror trading over copy trading, as all human error is removed from the equation. For example, the markets are constantly evolving, which may result in the algorithm running on outdated assumptions. When this happens, the algorithm will take trades that no longer work in the current environment, quickly blowing up your entire trading account. – In social trading, traders exchange ideas in a community, to benefit all members of the community, whereas copy trading is more transactional and automatically copies the trades of others. Back before social media platforms, some traders ran newsletters where they discussed their trading ideas. Followers could then manually join on to the trade or decide against it.

Buy Crypto

If you are syncing to somebody in the public eye, research them extensively. It also fits into the wider ethos around blockchain and cryptocurrency, where transparency is viewed in a positive light. Crypto has always been about pulling the curtain back and showing the world how to handle and manage money without hiding. Remember that some of the core elements of this industry surround the notion that the opaque nature of traditional finance makes it hard for individuals to partake. Both of these examples can be highly stressful for beginners and those who do not have a ton of cash to spare themselves. So, even if a well-regarded trader is doing this, it might not be smart for a beginner to follow them.

• Crypto copy trading is similar to social trading or mirror trading.
• Any action taken by the reader based on this information is strictly at their own risk.
• You can trade with perpetual swaps, futures contracts, options, and more.

There are several factors to consider when choosing a copy trading broker. Copy trading in the crypto market presents both opportunities and challenges for investors. Understanding the risks and rewards is crucial for making informed decisions when venturing into this realm. You could say that the essence of learning what is copy trading in crypto is learning how to study other people and learning which people align with you on the trading floor.

Best Crypto Day Trading Courses for Aspiring Traders

If you’re concerned about keeping fees low, then carefully consider the costs before trading. The key is choosing a trader to follow whose investment style and goals align with yours. For example, if you invest conservatively then you’d copy someone with – a conservative trading bent. Likewise, if you’re a growth investor then you shouldn’t match the trading activity of a value investor. PrimeXBT is a copy trading platform that allows traders of all experience levels; from experienced to novices alike.

• Say trader you’re following buys 100 shares of a particular stock.
• It means your assets will depend on the performance and security of the software.
• However, too much transparency may lead to losses for the platform, as followers may be able to employ certain techniques to avoid paying following fees.
• When looking for a trader, choosing one in the age of social media is challenging.
• They can also setup a performance fees which will help them to make extra money from the trading.

One can examine the track record of various lead traders on the dashboard and select the one that fits in with the parameters of their choice. Investors should carefully consider the trader they want to copy and conduct thorough research before copying their trades. It’s also essential to manage risk by setting stop-loss orders and monitoring one’s portfolio regularly. The best platforms for copy trading are eToro, AvaTrade, Bybit, and BingX. Each investor should carefully research the offerings of the available platforms, as some may offer support for other cryptos.

Is copying cryptocurrency trades legal?

EToro is a multi-asset platform that offers both investing in stocks and crypto assets, as well as trading CFDs. 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. Copy trading is significantly more social than other types of trading, as it involves interacting more directly with other traders. It liberates you from the tedious process of continually analyzing price charts and following market trends.

• The content published on this website is not aimed to give any kind of financial, investment, trading, or any other form of advice.
• ZuluTrade also allows login via Facebook, convenient for those who regularly log in to check their account.
• With the Trality Wallet, you no longer have to manually configure and manage API keys from an exchange account in order to connect to Trality.

By copying the trades of successful and experienced traders, beginners can effectively leverage their expertise and decision-making skills. This reduces the learning curve and provides an opportunity to participate in the crypto market without needing extensive knowledge or analysis. A copy trading platform is a financial trading platform that offers retail investors the option to follow and automatically copy the trades of more experienced traders. Meaning, that they will offer a social component to the trader community, where they can communicate and share investment ideas and strategies. On one hand, the rewards of copy trading lie in its potential for generating substantial profits. By following successful traders who have consistently achieved positive results, there is a possibility of earning significant returns on investment.

Copy Trading vs Social Trading vs Mirror Trading

For example, on eToro, you don’t pay extra for copy trading, but you still pay the normal fees for spreads and overnight fees. Again, on NAGA, you pay €0.99 for each trade you copy, and 5% of your profit if it is more than €10. You also pay the broker’s fees for spreads and commissions, which change depending on what you trade and what account you have. The trading fees for copy trading are not the same for every platform or broker. This does not include the fees you pay to the broker for spreads and commissions.

• With so many options available, knowing which copy trading platform to choose can be difficult.
• In 2014, eToro became the first trading platform to support cryptocurrencies when it added bitcoin (BTC) support.
• The copy trading crypto feature allows all Bybit users to follow experienced traders and realize similar gains while only contributing 10% of their profits to Principal Traders as commission.
• In social trading, traders exchange ideas in a community, to benefit all members of the community, whereas copy trading is more transactional and automatically copies the trades of others.
• However, it is not necessarily a bad thing, as sometimes, too much data can cloud judgment and lead to a false sense of security.
• Then, immediately after your chosen principal trader places a market order, all new copy trades will be initiated via a market order based on those parameters.

In this sense, copy trading can be a good idea for experienced traders looking to take a step back, but it is likely unwise for people just starting out. Another way of increasing your chances of success is by copying multiple successful traders with different trading systems. After all, diversification makes you less dependent on market conditions. Firstly, you need to understand the trading system of the trader you want to copy. Most people have copy-traded at least once in their lives, by following experienced traders on Twitter or Discord into a trade.